Section 541(a) of the Bankruptcy Code defines assets of the Chapter 7 Bankruptcy estate. Essentially, it is all legal and equitable interests’ debtor has in the world on the date the bankruptcy petition is filed with the bankruptcy court.
Occasionally, we will be asked if debtor has to disclose all their assets. I think the confusion stems from the fact that most people want to keep their vehicles and homes and don’t want the bankruptcy to impact their ability to keep them.
I typically explain to clients that bankruptcy is the opposite of poker- in poker you hide your cards. In bankruptcy, you are an open book and must disclose all assets, whether you are keeping them or not. The idea is to lay everything on the table and give the trustee and creditor clarity as to what you own and what you have for debts.
Now, the assets that are considered part of the Chapter 7 Bankruptcy estate are assets that are owned on the date of filing with 2 very important exceptions to this rule. Section 541(a)(5) provides that any inheritance received from a person who passed away within 180 days of filing of the petition is also an asset of the Chapter 7 Bankruptcy estate. Also, any divorce settlements received from divorces pending at the time the bankruptcy was filed is also an asset of the Chapter 7 bankruptcy estate.
There are exceptions to what is considered an asset of the Chapter 7 Bankruptcy estate as well. Anyone looking into a Chapter 7 Bankruptcy would be wise to hire local competent bankruptcy attorneys to guide them through this process.
When the time is right, or when you are ready, reach out to Minnesota’s HIGHEST GOOGLE REVIEWED bankruptcy law firm at www.kainscott.com. You will be glad you did!