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 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.

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.

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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.

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How Long After Discharge Can a Trustee Take Assets?
 

References

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What Happens When You Reaffirm a Vehicle After Bankruptcy?

Bankruptcy allows you to get a fresh start financially, clearing up debts by paying some and dismissing others. Filing Chapter 7 bankruptcy, also called "liquidation" bankruptcy, doesn’t mean you have to give up everything you own, even if you still owe money on some of your assets. If you reaffirm your obligation to pay for an asset, such as a vehicle, you can keep that asset. However, without reaffirmation, you could lose your vehicle after your bankruptcy proceedings if you still owe money on a car loan.

Can the Bankruptcy Trustee Force the Sale of an Inherited Property?

Like everything else you own when you file for bankruptcy, property you inherited before the bankruptcy becomes property of the estate and under the control of the trustee, unless you can claim it as exempt. Any property you inherit, or become entitled to inherit, within the 180 days after you file for bankruptcy also becomes property of the estate and can be sold by the Chapter 7 trustee.

What Happens if I File Bankruptcy but Leave an Asset Off the List?

Filing for bankruptcy protection is a serious legal business; federal law relating to the complete disclosure of information applies. If you are petitioning for bankruptcy, the law requires that you list all of your assets, meaning anything that you own outright, own jointly with a spouse, or have a contractual interest in. This could be something of value or something worthless in your own eyes. Under the law, it makes no difference -- all assets must be revealed.

Bankruptcy

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