This is part of our series on How To File Bankruptcy.
When you file bankruptcy, a failure to list all personal property may mean you don’t get to keep it.
When you think about property, you think of houses and cars. You’re not thinking about that junky sofa, a stack of CDs you abandoned years ago for an iTunes account, or that lawsuit you’re thinking about bringing.
Forget to list them on your bankruptcy schedules and you could find yourself giving it all up.
List All Personal Property
Under the bankruptcy laws, you’re required to disclose on your schedules all property you own.
That includes a laundry list of “stuff” you don’t ordinarily think about.
Everything from household furnishings to clothing, from bank accounts to potential lawsuits, from livestock to ammunition. It’s all got to be disclosed and valued.
How To List The Property
As with real property, you are required to describe the property with as much accuracy as possible. For example, you’ve got to provide the following information:
- description and location of the property;
- the nature of your interest; and
- the current value of the property.
How To Value Personal Property
The value of each item of personal property is the amount you could reasonably expect someone to pay for it. We’re not talking the cost to replace the items – we need to know how much would pay you for this particular item.
For musical instruments and jewelry think about, “pawn shop value”.
For collectibles, consider what a collector would pay.
Clothing and household furnishings? You’ll need to talk about Salvation Army valuation.
If you’ve got a pending lawsuit, we’ll need to talk with your lawyer and get a sense of what the case is worth.
Failure To Disclose
If you don’t list a piece of property, you lose the right to keep it.
The reason for this is that if you fail to list a piece of property, you can’t exempt any portion of the value. And given that all of your property becomes part of the bankruptcy estate when your bankruptcy case is filed, a failure to exempt the property means you haven’t kept it away from the estate.
This comes up most often in the case of a pending lawsuit for personal injury or money damages. If you don’t list it on your bankruptcy schedules, the other side will walk into court and get the judge to dismiss the case.
By failing to list it on your bankruptcy schedules, you’re effectively telling the world that you don’t own it.
That’s why I spend so much time with my clients talking about property. It’s important to protect you and cover all the bases.