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What is an asset in bankruptcy?

WHAT IS AN ASSET IN BANKRUPTCY?

Bankruptcy requires Debtors inventory and value their belongings at replacement value (i.e. if you replaced that 10 year old sofa with the same 10 year old sofa, what would you pay?). While it sounds like a fairly simple and straightforward request, rarely do Debtors understand the implication of what an asset is, especially in the bankruptcy context. Here are some examples:

Cash-change in your couch cushions, ash tray or piggy bank; rainy day fund in your mattress, what’s in your purse or wallet.

Bank Accounts-This may be an easy one-its bank accounts! But don’t forget those online only banks, accounts you opened just to get that free Ravens towel. What about PayPal? Has a friend or family member recently given you money and used PayPal, or have you sold something on eBay you were paid via PayPal and the money is sitting in your account there. Let’s also not forget joint accounts, this means ANY bank account your name is on, even if just for convenience purposes or as a “Pay on Death” recipient.

Security Deposits-landlords, public utilities, earnest money down payments, deposits for future vacations, deposit on a lease.

Household Goods & Furnishings-Towels, knick-knacks, curtains, dishes, bedding, irons, and all furniture. I think of ‘goods’ this way-can you buy it at Bed, Bath & Beyond? Then it’s likely a household good! There’s a little section of the bankruptcy form that says “including audio, video and computer equipment” so don’t forget those! Surround systems, boom boxes, video cameras, computer accessories and printers etc.

Books, pictures, and other art objects, antiques, stamp, coin, record, tape, CD and other collections or collectibles-books, CDs, DVDs, VHS (what is that?), Bible, wall art, posters and pictures. Any antiques, collections, collectibles, stamps or coins should be individually appraised to assure their value is correctly listed.

Wearing Apparel-everything from your hats to socks and all the in between (yes your underwear too, except they probably don’t have a resale value!). Don’t forget your dress clothes, suits, coats, belts and SHOES (my personal favorite). It’s important to remember that most clothing does not have a high resale value.

Furs & Jewelry-this includes faux fur and costume jewelry! If there are big ticket or unique items (i.e. antique or unique setting) have the jewelry appraised (and not a “for insurance purposes” appraisal). Probably a best bet to go to a pawn shop for jewelry appraisals.

Firearms, Sports, Photographic, and other hobby equipment-pretty self explanatory but don’t forget all of the memory cards for your camera, golf clubs, scrapbooking supplies. Think about your hobbies and what you own that is related to them. Firearms should be itemized by make and model, but should also include any ammunition kept on hand.

Interests in insurance policies-check all life insurance policies you own to see if they have a cash value, sometimes called a surrender or refund value. These are often called “whole life” policies. But if you are the beneficiary of a life insurance policy owned by someone else, you should discuss this with your bankruptcy counsel as well.

Annuities-Lottery annuities, personal injury settlement annuities, retirement annuities.

Education IRA-now called a Coverdell ESA or 529 Plan.

Interests in IRA, ERISA, Keough, or other pensions or profit sharing plans-This means everything from 401k to IRA, pensions and any other retirement plan.

Stocks and interests in incorporated and unincorporated businesses– Stocks on the stock market or stocks in a defunct business the debtor started years ago. Employee Stock Option Plans.

Interests in partnerships or joint ventures-even if defunct and out of business.

Government & Corporate Bonds and other negotiable and nonnegotiable instruments-savings bonds for your children apply here; also promissory notes in your favor, a contract entitling you to payment or property.

Accounts Receivable-Anyone that owes you money, including your Mom, Sister, neighbor, former employer, tenant etc.

Alimony, maintenance, support and property settlements to which the debtor is or may be entitled-This is a pretty broad one as it includes things you “may be entitled.” If you have a divorce or other domestic case pending at the time of your bankruptcy, you should provide all of the pleadings to your bankruptcy attorney and any and all relief you are asking of the divorce court should be included in this line item. Child support, including arrears is listed here as well.

Other liquidated debts-This can include tax refunds (if amount known) or any money that is owed to you in a fixed sum.

Equitable or future interests, life estates, and rights or powers exercisable for the benefit of the debtor other than those listed in Schedule A-as a Debtor you should ask your parents and grandparents whether they have put you on the Deed to their house, even as a remainderman interest on a life estate. If they don’t know, ask whether they’ve had estate planning or Medicaid planning done, this may be a good indication that an attorney has maybe performed some Deed work that could affect your client. Also disclose whether you affirmatively know if you are the beneficiary under a Trust or Will of another person.

Contingent and noncontingent interests in estate of a decedent, death benefit plan, life insurance policy or trust-if a close friend or relative has recently died, you need to find out post haste whether or not you are a beneficiary of any of their property and this needs to be disclosed, even if the property is not distributed to you yet.

Other contingent and unliquidated claims of every nature– includes tax refunds (if amount unknown) but most importantly it includes any suit or right to bring a suit against someone that you have at the time of filing. Recent car accident and you’re negotiating with insurance? Disclose it. Slip & fall at work and you have a workers comp claim? Disclose it. Signed up for one of those class action law suits that you hope to get $1.00 from in 10 years? Disclose it. Even if you haven’t ACTUALLY sued anyone, if you sustained any injury at all to person or property, the incident should be disclosed. If you have seen an attorney about an incident and they told you your case was worthless, it should be disclosed. These can also include claims for contract, torts, employment and sexual harassment.

Patents, copyrights and other intellectual property-if you have an agent or have had a contract to sell an idea, song, book etc., this applies to you.

Licenses, franchises and other general intangibles-Professional licenses, liquor licenses, franchise agreements.

Customer lists or other compilations containing personally identifiable information-Usually only applicable if you’ve ever owned your own company.

Automobiles, trucks, trailers and other vehicles and accessories, boats, motors and accessories-vehicles should be listed by year, make and model and should include an indication their mileage and condition. Utility trailers, campers, RVs and any other kind of vehicle accessory should be listed. Picture your garage, shed and backyard and determine whether anything you see fits in this category.

Office equipment, furnishings and supplies-if you have a home office all items should be listed, though many probably fall under the “household goods” category as well.

Other personal property of any kind-pre-petition garnished wages or bank accounts; website domains, PSLs at M&T Bank Stadium, season tickets to sporting event, gift cards, tools.

 The important thing to remember is that NOT disclosing an asset is a felony (as is any other lie you tell in bankruptcy)! Disclose everything to your bankruptcy attorney, it may change their analysis of your case, but they are best suited to help you strategize how best to approach your case given that information. Once you have failed to disclose, there is no going back.

 

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.