Article written by Columbia, SC bankruptcy attorney Daniel Stone
One of the hardest things for a prospective bankruptcy client to understand when filing for bankruptcy is what is an asset? When filing for bankruptcy, a Debtors’ assets include ALL legal and or equitable interest of the Debtor. Huh? What does that mean? Lets deal with the obvious first. If you have a house deeded in your name or a car titled in your name, this is clearly the Debtor’s asset. Other obvious assets include additional real estate, clothes, furniture, appliances, electronics, guns, books, collectibles, boats, trailers, bank accounts (checking, savings, and business accounts), stocks/bonds, business equipment/inventory, hobby equipment, tools, inheritance trusts, annuities, and of course lottery winnings! Please note this is not an exhaustive list.
There are also many less obvious assets that we do not often think about when thinking of our own assets. Some of the easily forgotten assets include: life insurance, retirement, timeshares, tax refunds accrued during the current year or any other year, apartment deposits or deposits in any other fashion, licenses (any license with value such as an alcohol license), intellectual property assets (patents, trademarks, or copyrights), interest in any business (sole proprietor, LLC, Corp, etc.).
Many Debtor’s forget to list as a possible asset a possible claim or lawsuit against someone. Say for instance, you are in a car wreck and someone hit you. Even if you haven’t file a lawsuit, you have a potential claim against someone and this is an asset of the Estate. Failure to list this could have dire consequences. Other potential claims or lawsuits include workers compensation or disability claims.
Lets also examine equitable interest asset. An example of an equitable interest would be where you have a car that is not titled in your name but you use the car and make all the payments and up keep on the car. In a scenario like this, you may have an equitable interest in the car due to your payments.
Finally, lets examine why a Debtor is required to list all their assets in a bankruptcy. First, the bankruptcy Code requires that all assets be listed on the schedules. Failure to list all assets can have dire consequences such as having your case dismissed, not being able to receive a discharge, and/or your case being referred to the United States Attorney’s office for criminal prosecution.