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Don’t forget to List These Assets in Your Bankruptcy Petition

by Dorota Trzeciecka on August 25th, 2014

According to bankruptcy attorneys, the most often unreported assets in bankruptcy are:

1.  Claims debtors have against another person, like claims for personal injury, for example;

2.  Income tax refunds;

3.  Cash value of life insurance policy;

4.  Jewelery; and

5.  Cemetery plots.

I can’t tell you how many times I had a client sitting in my office, telling me that he/she did not own jewelery, while I was staring at wedding and engagement rings on their fingers, or a watch on their wrists.  The theory is that debtors do not think of these as assets, or in bankruptcy language, as their “property”.  However, Bankruptcy Code’s definition of property of the estate is very broad.  Property of the estate is defined as “all legal and equitable  interest of the debtor in property as of the commencement of the case “.  And, that is not even all inclusive.

So, what happens if you omit an asset from your petition?  You can always amend your property schedules to add the omitted asset, but the trustee may not let you claim the property as exempt, even if the property would be entitled to exemption under the applicable law.  Or worse, if you have a personal injury claim pending before filing of your bankruptcy, and you did not disclose it,  you may be precluded from recovery of damages in your personal injury case on the basis that you did not include it it in your bankruptcy petition.

So, the theme for all the bankruptcy filers out there should be “Disclosure, Disclosure,  Disclosure!”