When filing Chapter 7 bankruptcy, a debtor must disclose all interests in any assets, including assets that have not yet been received, but which the debtor is entitled to receive. Assets that are often overlooked by debtors include:
• Bank accounts that have not been used in a while;
• Tax refunds that have not been received;
• Stock accounts and retirement accounts;
• Unpaid alimony or child support;
• Inheritances or life insurance proceeds;
• Earned commissions from sales positions;
• Money owed to the debtor that has not been collected;
• Legal claims the debtor may have against others.
It is important to list all assets the debtor can remember or discover in order to properly protect (exempt) those assets in the bankruptcy schedules. If the assets cannot be exempted, the Trustee has the opportunity to liquidate the assets that are not exempt as allowed by bankruptcy law. Of course, if there are assets that are not exempt, the debtor may choose to delay filing the case until the non-exempt assets are exhausted (especially if the debtor is not in hurry to file).
Knowing what assets the debtor has is important when deciding which exemption statutes to use. In California, there are two sets of exemption statutes, and the debtor must decide which is best for protecting the assets they have. Because the two exemption options are very different in terms of what they protect, it is often best to consult with an attorney prior to filing to make sure that none of the debtor’s assets are at risk if they file a Chapter 7 bankruptcy case.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.