What Is Considered an Asset in Bankruptcy?

By Beverly Bird

Assets are treated differently in bankruptcy depending on whether you file for chapter 7 or chapter 13. This doesn't change the definition, however. For bankruptcy purposes, an asset is anything you own and anything you might have a right to own at a later time.

Assets are treated differently in bankruptcy depending on whether you file for chapter 7 or chapter 13. This doesn't change the definition, however. For bankruptcy purposes, an asset is anything you own and anything you might have a right to own at a later time.

Assets in Chapter 7

When you file a chapter 7 bankruptcy petition, you give consent for the trustee to take possession of your assets and sell them to raise cash to satisfy your debts. If any debts remain unpaid because sufficient assets aren't available, these balances are discharged, and you're relieved of responsibility for paying them. Assets that a trustee can be liquidate include your personal property, pets and animals, real estate, some retirement benefits, life insurance, inheritances, your interest in a business and intellectual property rights such as patents. If you have a pending lawsuit, the trustee is entitled to the proceeds in many cases.

Get a free, confidential bankruptcy evaluation. Learn More

Using Exemptions

Assets do not include pension benefits or proceeds from a lawsuit that represent compensation for libel, pain or suffering. Additionally, both federal and state laws provide for the use of exemptions -- dollar limits in certain property that you can reclaim from your bankruptcy estate, which is the pool of assets that your trustee can sell. Common exemptions cover equity in your home, your automobile and personal property.

Assets in Chapter 13

Your assets are not at risk for liquidation if you file for chapter 13 bankruptcy. In this type of case, your creditors are paid from your income that is left over each month after you pay your necessary living expenses.

Get a free, confidential bankruptcy evaluation. Learn More
Disclosing Money for a Bankruptcy

References

Related articles

Chapter 7 and Abandoned Collateral

Filing for bankruptcy is often the first step in achieving a fresh financial start. But when you file for Chapter 7 bankruptcy, several things must take place before staring afresh. First, you must hand over your assets to a trustee so that they can be sold to pay your creditors. This is often one of the hardest parts of the process. Sometimes, however, the bankruptcy trustee decides to abandon an asset, allowing you to keep it.

What if You Are in an Accident and Have to Sue for Injuries During Bankruptcy?

There's no way to time an accident so it befalls you when it's a little more convenient. If you're in bankruptcy – or even if you're contemplating filing for bankruptcy – the timing of an accident can't get much worse. Accident lawsuits aren't complicated by Chapter 13 bankruptcies as much as they are by Chapter 7 proceedings, however.

Can a Bankruptcy Court Take Your Injury Settlement?

If you are on the verge of filing for bankruptcy because you lost your job due to an injury, you may find yourself in bankruptcy court seeking protection from your creditors and in state court pursuing a personal injury claim. You must work with your attorneys carefully, and disclose any personal injury claims to the bankruptcy trustee or you may not be able to recover any money for your injuries.

Related articles

Rules for Chapter 7 Bankruptcy & Inheritance

The law is full of loopholes, and nowhere is this more true than in the area of bankruptcy statutes. The U.S. ...

California Law on Inheritance in a Bankruptcy

If you file for bankruptcy at a time when you are expecting to come into an inheritance, you may need to include the ...

Can Business Assets Be Touched if You File Personal Bankruptcy?

If you are self-employed and think you might need to file for personal bankruptcy protection, your case is probably ...

Advantages of an Irrevocable Trust

If you’re like most people, you’ll need a really good reason to give up control over the hard-won assets ...

Browse by category