When you follow bankruptcy procedures correctly, you avoid delays in your case and even legal sanctions that could endanger your bankruptcy. This is definitely true when you attempt Chapter 7 liquidation and must list your assets.
Your assets become a part of your bankruptcy estate, which your bankruptcy trustee will oversee for the duration of the case. When filing for Chapter 7 bankruptcy, you must disclose all assets you own or have an interest in. There are a variety of asset types that you should account for.
Personal property encompasses material goods like clothing, furniture, artwork, jewelry and vehicles. Even if you think an item has little monetary value, you should still list it to avoid accusations of hiding assets. Your trustee will determine what assets to liquidate.
Real property involves land and permanent structures like houses, condos, commercial buildings and barns. Bankruptcy exemptions may come into play, though. As of 2023, Federal law allows bankruptcy filers to exempt a primary residence with equity up to $27,900.
Intangible property lacks physical form but still holds financial value. This includes money owed to you through your accounts receivable, patents, copyrights, customer lists, licenses, insurance payments or claims, retirement accounts and stocks. Disclose all intangible assets even if you think they are exempt.
If you own a business, you must list all associated assets, such as equipment, inventory, supplies, licenses, customer records and operating agreements. Failure to disclose even a seemingly insignificant business asset could have serious legal consequences.
When preparing your Chapter 7 bankruptcy petition and schedules, err on the side of over-disclosure. This is also a good time to familiarize yourself with federal and state exemption laws to find out which assets you can cover with an exemption and hold on to once your bankruptcy is complete.