At a first consultation, a debtor will usually tell a New York bankruptcy lawyer about his or her debts in good detail. Information on the other term in the bankruptcy equation, assets, is often more difficult to provide. After all, debtors struggle paying their bills, and their property doesn’t remind them that they own it the way creditors remind them of their obligations. True, most debtors have a good grasp of what they own, but there are many unusual or uncommon assets that they might not think about but should list in their bankruptcy schedules.
Here are several examples, many of which I’ve discussed before.
- Digital currencies – Bitcoin and similar “cryptocurrencies” may fluctuate in value, but they are something that a trustee can sell to repay creditors. The obvious problem is whether debtors are hiding assets in Bitcoin accounts, which is a big bankruptcy no-no. A more familiar example is money in a PayPal account.
- Corporate rewards, perks, miles, and gift certificates – If they’re fungible like gift cards or certificates, then they are assets; otherwise, they are not.
- Lawsuits – If the debtor has a viable legal claim for money against another party, then that’s an asset, even if the lawsuit has not been filed. The legal trap debtors fall into is judicial estoppel, which bars their lawsuits if debtors don’t disclose them in their bankruptcies. New Yorkers also regularly receive letters from product manufacturers (usually cars and computer equipment) claiming they may have rights to income in a class-action lawsuit. These too are assets, even if they are for trivial amounts.
- Pets – People might strongly disagree with categorizing pets as property, but New York’s bankruptcy exemptions protect them and even their food. Debtors choosing the federal exemptions might not have the same advantages, but it’s unlikely that the trustee will want to take away a household pet.
- Inheritances – Property inherited from others is one of three types of post-petition assets that can be roped into the bankruptcy estate after the case has been filed. The other two are life insurance payouts and property received via a divorce. (This doesn’t include support payments.)
- Security deposits – These are quite common for debtors renting their homes. However, they are often easily protected by exemptions and the trustee can only liquidate them once the debtor has moved out, which might prolong the bankruptcy case.
- Loans to businesses and business interests – Sometimes debtors make loans to their businesses or they simply own shares in a business that may or may not be filing bankruptcy as well. These loans or shares are assets to the debtor and must be listed in their bankruptcies.
These examples are only a handful of the kinds of assets debtors might own. There are many, many more. If you are experiencing financial difficulties, then talking to an experienced New York bankruptcy lawyer will ensure that you properly account for all your assets in your bankruptcy.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.