When you declare bankruptcy, you must be honest in your statements. You must list all of your property, even the most uncommon bankruptcy assets.
List your assets in Schedule A/B. Be sure to include all real property, vehicles, inventory, home furnishings, clothing, jewelry, and all other tangible things that you own. Beyond personal and real property, be sure also to list all financial assets in either or both Schedule A/B and Statement of Financial Affairs.
Everyone has an alarm clock, and everyone has an umbrella. Everyone eats off plates with forks. Appropriately scheduling property of inconsequential value serves an important function in the administration of your case.
But if you fail to disclose an asset of considerable value, no matter how uncommon, you may be denied a discharge. Take care to disclose all of your assets to your attorney before your case is filed to ensure that you list everything you own.
7 Most Common Uncommon Bankruptcy Assets
Corporate Interests. If you have a legal interest in any business, you must list it in your schedules, even if you have no day-to-day connection with the business.
Cash-value life insurance policies. Most insurance policies are “term” policies and you cannot borrow against them. But if you have the ability to cash out your life insurance policy, so does the bankruptcy court. List it as an asset.
Pets. Pets are common, but did you know you must list them as an asset? The government doesn’t want your dog unless it is a pedigreed breeding animal and a possible source of income. Yet you must still list your pet on Schedule A/B. That’s OK, though, because this allows you to list your pet expenses in your Schedule J.
Timeshares. Actually, timeshares are common assets, and many people own them. Bankruptcy filers sometimes forget to list timeshares, however, because they are often literally valueless. Still, you must list both the debt and the asset. In some cases, your attorney may be able to dispose of the timeshare through a deed back to the company.
Inheritances. If you are expecting to inherit money within the next year, you should carefully weigh with an attorney your decision to declare bankruptcy. You may be able to save money by settling with your creditors outside of the bankruptcy process.
Lawsuits. If you have a potential legal claim against any person or entity, you must list that claim as an unliquidated asset.
Transfers. If you transferred or sold any asset within the last year, then you must disclose the transfer in your Statement of Financial Affairs. This includes not only outright transfers but mortgages as well. In addition, you must list any financial instruments to which you held an interest within the last year and that you closed, sold, moved, or transferred.
Assets Can Be Exempted in Bankruptcy
Even uncommon bankruptcy assets may be exempt, or shielded from liquidation, under federal or state exemption laws. Consult with a qualified attorney on which bankruptcy exemptions are best suited to protect your specific belongings and assets.
Don’t try to hide assets. Be honest with your attorney about what property you possess and you will achieve better results in your bankruptcy case.