Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

What Exactly Is an ‘Asset’ in New York Bankruptcy?

It’s a simple question that arose recently when I wrote about perks, miles, gift certificates, and other non-fungible currencies that everyday Americans receive from corporate retailers. The question was whether those benefits could be taken by the trustee in bankruptcy. Aside from the practical issue of the restrictions the issuers place on them, the answer was no. The reason was that they weren’t assets. So, what is an “asset”?

Surprisingly, the answer to this crucial question is not to be found in the definitions section of the Bankruptcy Code; nor, for that matter, are the terms “property” or “estate.” Rather, the answer is to be found in Section 541, which is titled, “Property of the Estate.”

This section doesn’t define the estate; it simply wills it into being upon the commencement of a bankruptcy case. However, it does specify what property comprises the estate, “wherever located and by whomever held.” Here’s a quick rundown:

  • All the debtor’s property, specifically when the debtor has “legal title” and “equitable title.” This means the debtor has control over the property along with the legal right to use it. Sometimes debtors have one but not the other. Importantly, this is property that the debtor has at the time the case is filed, not anything acquired after.
  • Some types of “community property” in states that allow community property in marriages, so not New York. For such states, if the debtor has sole control over the community property or it’s somehow liable for a creditor’s claim against it then it can be included in the estate.
  • Some interests in property that the trustee recovers, like property that has been wrongly transferred to another party or that belongs to a general partnership, for example. This is a fairly broad category.
  • Interests in property that are preserved for the estate or ordered to be transferred to it.
  • Property received through inheritance or will, covered here.
  • Unearned incomes from property, like rents, proceeds, or offspring.
  • All assets the estate acquires after the bankruptcy is filed.

While the above definition is fairly broad, the code is much narrower when it addresses what is not the property of the estate.

  • Powers the debtor may exercise for another’s benefit.
  • Expired nonresidential leases.
  • Eligibility to participate in certain Higher Education Act programs, like Pell grants.
  • Certain interests in hydrocarbons that have been transferred to another party. This would be like an oil and gas lease.
  • Retirement accounts.
  • College savings plans.
  • Employer withholdings that are contributed to accounts for the debtor, e.g. retirement accounts or health insurance.
  • Property the debtor has pawned.
  • Proceeds from money orders the debtor has sold.
  • Funds placed into an ABLE program.

This definition covers nearly all situations debtors find themselves in, so it’s rare for there to be a question as to whether something is an asset. More likely, the trustee will challenge an asset based on the debtor’s control over it.

Regardless of what kind or how many assets you may own, consulting with an experienced New York bankruptcy lawyer will help make your case go more smoothly.

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 New York bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

Beware Grace Periods, Debtors

Too often, debtors see grace periods offered by lenders as free benefits. “Grace” makes it sound so innocent. However, debtors who routinely rely on grace periods when making payments will find themselves facing financial difficulties that might lead to bankruptcy. The reason is that although creditors offer grace periods to debtors, they also use them

Read More »

Bankruptcy May Not Rescue You From Vicious Personal Disputes

Bankruptcy is a technical process that assumes everyone working within it is mostly rational. To the extent that it expects parties to deviate from irrational behavior, the Bankruptcy Code and its accompanying rules include incentives to keep parties in line. Creditors are usually large and impersonal, and they rarely care if their debtors file bankruptcy.

Read More »

Non-Lawyers’ Explanations of Bankruptcy May Be Wrong

Do you have financial problems? Do you tend to ask your friends for advice? Is one of your friends an experienced New York bankruptcy lawyer who will explain the process for you? Are your friends otherwise knowledgeable people? The answer to these questions may be, “Yes but you don’t know it.” Although many bankruptcy lawyers

Read More »

6 Steps to Take Before Filing Bankruptcy

Leaving your case to an experienced New York bankruptcy lawyer is not the only step on the to-do list before filing bankruptcy. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result.

Read More »

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »
Scroll to Top