The cardinal rule of personal bankruptcy — list it or lose it!

Sometimes dealing with legal matters is like walking through a minefield of complexity — court opinions that don’t agree, statutory language that can’t be figured out even with a law degree, and all that legalese that applies as soon as you click “accept.”

In the bankruptcy courts, however, there is one cardinal rule that is pretty easy to understand — list it or lose it!

All of your assets need to be declared if you are going to file a bankruptcy petition. It’s as simple as that. Failure to include assets mean they are automatically forfeited to the bankruptcy trustee who will sell them on behalf of your creditors — even if you could have protected them otherwise. Plus you could be made to pay a penalty (not good if you are in need of bankruptcy protection) or in an extreme case, face the wrath of the criminal law.

On the other hand, declaring your assets allows you and your bankruptcy attorney to seek ways to protect them, principally by using up all available exemptions recognized by either the federal, Massachusetts, or New Hampshire governments.

If a particular asset can’t be protected entirely, sometimes it can be protected partially. In that case, you may be able to “purchase back” the non-exempt portion from the trustee. Or some people may be able to consider Chapter 13, where you keep even the non-exempt property, but make monthly partial payments to your creditors. In other cases, an asset that can’t be protected may not be considered worth selling by the trustee, and simply “abandoned,” which means you get to keep it anyway.

So list all your property, and don’t lose it!

 

By Doug Beaton

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