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Important Assets Sometimes Omitted from Bankruptcy Schedules by Debtors

Published March 22, 2014 by Sasser Law Firm

Filing a bankruptcy petition creates a bankruptcy estate comprised of most assets a debtor owns at the time of filing. The good news is that there are exemptions available to protect certain assets. Exempting an asset will often result in the property being abandoned from the bankruptcy estate. A non-exempt asset can be abandoned if it is burdensome and its value is inconsequential. However, the only way to exempt an asset and/or to enjoy the benefit of an abandonment is to properly schedule the asset in your bankruptcy petition. Another important reason to fully disclose assets is to avoid committing perjury, which could result in discharge litigation and/or criminal prosecution. Many debtors do not intend to mislead when they schedule their assets, but it is sometimes easy to forget the property that is not used everyday- the bachelor pad furnishings banned to a storage unit upon marriage; the mint-in-box collectible Star Trek figurines still stored at your parent’s house; the air compressor loaned to your neighbor two years ago.

Below is a list of property commonly forgotten that needs to be included on a bankruptcy petition:

Real Estate

  • Inherited land (aka heir property)
  • Land where the debtor only owns a partial interest
  • Time Share
  • Investment/Rental property
  • Vacation property
  • Land in a foreign country

Tangible Personal Property

  • Possessions held in a storage unit, attic or basement
  • Property at a pawn shop
  • Vehicles titled in your name, but used by another (ex: car purchased for college student)
  • Property you own that is held by someone else (ex: a security deposit given to landlord, property lent to someone else, property in a storage unit or someone else’s house)
  • Property in a security deposit box

Intangible personal property

  • Right to file a lawsuit, even if not filed
  • Bank accounts (savings and checking) in your name, but open for the use of a child or spouse
  • Intellectual property (ex: patents, copyrights, trademarks)
  • Business goodwill
  • Stock options
  • Upcoming tax refund or percentage of pro rata tax refund earned at time of filing
  • Funds you are entitled to receive but have not yet received (ex: wages, commissions, bonuses, tax refunds, accounts receivables, vacation pay, other refunds)
  • Lottery tickets
  • Participation in class action lawsuit

When in doubt, it is generally better to declare too much than too little. The items listed above are not exhaustive, nor does it discuss the type of property not included in your bankruptcy estate. In addition, this blog post does not address situations where a debtor becomes entitled to assets after the case is filed such as wages, inheritances, bequests, life insurance proceeds, property settlements and lottery winnings. If you have questions about the property you own, the value of your property or whether or not it needs to be included in the bankruptcy estate, please contact Sasser Law Firm to set up a free consultation.

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