When filing bankruptcy, debtors must list all their assets on the bankruptcy schedules to show the Trustee and the court that the assets they have are exempt (protected) and should not be liquidated by the Trustee to pay creditors.
One type of asset that debtors often do not mention are anticipated commissions or payments they expect to receive after the filing of the bankruptcy case, but which were earned prior to the filing. Debtors are not always aware that assets that have not yet been received still count as assets that the Trustee can recover in a bankruptcy case.
A few common examples are tax refunds, commissions from an open escrow on a real estate transaction, and commissions for sales made prior to the bankruptcy filing. All of these assets must be listed and properly exempted or the debtor runs the risk of losing the asset to the Trustee when it arrives.
Failure to list the asset at all does not protect the debtor, because the Trustee will usually ask about such assets at the meeting that takes place about one month after the filing date. At those meetings, a debtor’s answers are under oath and if the Trustee discovers information about assets that were not listed on the bankruptcy schedules, he/she can pursue those assets unless they can be exempted through an Amendment to the original schedules.
Anticipated (but not received) assets are most common with jobs that involve commissions such as sales or real estate agents. It can also apply to expected inheritances, payments due for business services and any other example of a delayed payment for work already done or products already sold.
Regularly received income from employment is generally not an asset to be listed on the schedules even though payments will continue after the filing date because that income is considered to have been earned after the filing date. Income “earned” after the bankruptcy is filed is not an asset that the Trustee can recover.
It is important to consult with an attorney prior to filing bankruptcy to evaluate your current and potential assets to make sure all your assets are listed and will be exempt.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.