Assets and Bankruptcy

Debtors considering filing for bankruptcy often consider a number of issues, including current financial circumstances and long term financial well-being. Determining that bankruptcy is the right course of action is only the first step. Once the decision has been made there is a lot of work to be done. The debtor(s) will have to fill out a petition and schedules, or provide required information for an attorney for the attorney to prepare the petition and schedules.

One of the requirements of bankruptcy is that the debtor must list all assets. An asset is anything owned at the time of filing. Many people often think that they do not have any assets because their personal belongings may not seem like they are worth much. When filing for bankruptcy you should list everything you own, with reasonable particularity, regardless of the value of the property. Examples of assets that debtors may not initial consider include, but are not limited to: clothing, costume jewelry, CD’s, and home décor. When listing assets a debtor may list the current resale value of the property, not the purchase price of the property.

Listing assets can be even more confusing when discussing assets that are not tangible. Examples of such assets include personal injury claims, workman’s compensation claims, potential law suits against others, and inheritances. Debtors are required to list these, and many other types, of potential assets. If a debtor does not have one of the assets at the time of filing but later has such an asset he/she likely needs to amend his/her schedules to reflect this interest. A debtor should list a potential law suit if a cause of action has arisen at the time of filing, regardless of whether the debtor has pursed any legal recourse or intends to pursue any legal action. This asset may be the property of your bankruptcy estate and the trustee may be able to pursue this asset on your behalf and distribute any proceeds to creditors.

It is very important that debtors understand that an intangible asset, for purposes of the bankruptcy, becomes something that should be disclosed at the time you become potentially entitled to the particular asset. For example, should a person to whom a debtor is close enough in relationship to become entitled to property or money by inheritance through intestate succession or by devise under a will or other instrument prior to filing or within 180 days after filing a Chapter 7 Bankruptcy this must be disclosed. Here, the triggering event is the person passing away, NOT receiving the property or assets.

If you have any doubt about whether something should be listed you should consult with your attorney. If you have questions about this, or would like to schedule a consultation, contact A&L Licker Law Firm Today.

Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. For guidance regarding your specific situation, please contact A & L, Licker Law Firm, LLC directly.