What About Borrowed Assets in Bankruptcy

Posted by Wesley Scott on October 29, 2020 at 9:34 PM
Wesley Scott

Minnesota-Bankruptcy-Retirement-PlansA lot of people get by, by borrowing items that they either do not want to purchase or they cannot purchase. 

For instance, if I only have a month long need for a tall ladder, I may ask to borrow one, instead of purchasing it outright.  

This is okay to do while in a bankruptcy and that borrowed asset will not be scheduled as an asset of yours. That being said, the borrowed asset will still need to be added to the case. There is a section in the Statement of Financial Affairs where you list items that you have control of, but do not own. 

Why is this important?
It is important to list your borrowed items, so that the trustee, Court, and creditors are on notice that although you use this item, you do not actually own it. 

For example, say Client A borrows a car from his dad. Client A didn’t list this borrowed vehicle anywhere in his bankruptcy. Creditor 1 comes along and says, “Client A is committing fraud”, he has a car he did not disclose as an asset. This situation seems easily explainable, but Client A will have to explain why the car was not disclosed. Consider this though, what if Client A has non-exempt assets he wants to surrender in a Chapter 7 and an auctioneer has to come out. No one, including the auctioneer, was aware this vehicle was just borrowed and not actually owned by Client A. At that point Client A will have to show the vehicle does belong to someone else.

The easiest way to avoid any potential issue with borrowed assets, is to disclose it upfront in the case filing. 

Call Now for a Free Strategy Session from a MN Bankruptcy Lawyer from Kain & Scott

The attorneys at Kain and Scott will help you disclose your borrowed assets in the bankruptcy case. Visit www.kainscott.com to speak with an attorney today. You will be glad you did!

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