Disclosing Money for a Bankruptcy

by Beverly Bird

In most cases, you can pick and choose what personal information you share with others. When you file for bankruptcy protection, however, the federal government wants to know everything there is to know about you, your assets, your income and your debts. No detail is too small, and you have a legal responsibility to be forthcoming. You're receiving a gift: the discharge of your debts. In exchange, you have to be honest about your ability to pay them.

Get a free, confidential bankruptcy evaluation. Learn More

Necessity for Disclosure

The court and your trustee need a firm understanding of your assets in order to process your bankruptcy. When you file for Chapter 7, you give the court the right to sell your non-exempt assets, take your cash, and distribute the money to your creditors. Your creditors will receive as much as possible, and you'll no longer owe any remaining balances. When you file for Chapter 13, you enter into a payment plan supervised by the court. You give your trustee your extra income each month, and your trustee distributes this money to your creditors. If your plan doesn't satisfy your debts entirely, the court discharges the balances, just as with Chapter 7. Both chapters depend on how much money you have available for your creditors.


A schedule of assets is part of every bankruptcy petition. Your assets include not only big ticket items, such as your home or automobile, but the little things as well. The spare change in your pocket is an asset. The money in your checking account is an asset. Technically, even the can of soup in your kitchen is an asset. Although you don't have to detail every grocery in your home, you do have to list personal property, electronics, books, furnishings and the like, as well as your significant property. You have to disclose the balances in all your bank accounts and your cash on hand at the time you file.

Potential Assets

Your assets make up your bankruptcy estate -- your available property and wealth -- even if you don't yet have certain assets in your possession at the time you file. Your bankruptcy estate includes anything you may have a right to acquire later. For example, you might have filed, or plan to file, a personal injury lawsuit. You may have a pending workers' compensation claim, or you're named as a beneficiary in a will that's still in probate. You must disclose these things. The court wants to know if you're likely to come into a windfall six months after your debts are discharged.

Failure to Disclose

If you fail to report any assets or cash on your bankruptcy schedule, it's a major offense. If your trustee can prove that you've done so intentionally, he can report you to the FBI. Failure to disclose the extent of your assets is bankruptcy fraud, a federal offense. At the very least, the court will dismiss your case and you won't receive a discharge of your debts.

Amending Mistakes

If you omit money or another asset from your bankruptcy schedule, you can remedy the situation at any time. Even after your discharge, you can file a motion with the bankruptcy court to amend your petition. This generally requires that you attach a new schedule, listing accurate assets. You might also have to file a new exemption schedule if the asset you're adding is exempt under bankruptcy law. Exemptions are dollar amounts of property that you can protect from liquidation by the trustee. If you don't update your exemption schedule accordingly, the court can take the added asset and give it to your creditors, even after your debts have been discharged.