What Are Some Important Assets That Debtors Commonly Omit from Their Bankruptcy Schedules?
As a creditor, you’ll see hundreds, if not thousands, of people who owe you money file bankruptcy in an attempt to get out from under their debt. This is perfectly legal, of course, but you may believe that you’re losing out on some important cash flow for your business, particularly if you’re an unsecured creditor.
As an unsecured creditor, you only get paid if there are sufficient assets or income above what is owed to the secured creditors. Schedule B of the bankruptcy filing is where the personal assets of the filer are listed. Some assets will be inadvertently omitted. However, some people intentionally omit assets that could be sold to repay at least part of the money you’re owed.
Assets that Debtors Often Omit from Their Schedule B
When competing their Schedule B, people filing for bankruptcy may be tempted to fudge their personal belongings and assets a bit just to keep something for themselves. In a Chapter 7, or “liquidation” bankruptcy, all the debtor’s assets, aside from those exempt by the federal government’s statutes or the laws of the state in which they reside, are intended to be sold to pay off the person’s debt.
These are items frequently omitted, whether intentionally or otherwise:
- Claims or lawsuits against others. A person may not even think of these outstanding sources of income as assets. As a result, these items may be omitted from their Schedule B. Generally, though, an award for personal injury may have limitations on the amount that may be used to pay creditors. In South Carolina, for example, if the settlement or award was made specifically because of an accident and was meant to compensate the debtor for bodily injury, the entire amount is exempt.
- Financial accounts. In some cases, people may have accounts in a variety of different institutions: brokerage accounts, checking or savings accounts from areas where they used to live, accounts set up for them by family members, or even retirement accounts they’ve paid into at companies where they used to work. Any of these accounts could be forgotten. Additionally, people may be tempted to underreport the amount in their checking or other deposit accounts, sometimes by significant amounts.
- Jewelry. Some debtors may forget about jewelry they own, particularly if the jewelry is stored in a safe-deposit box or in the back of a drawer or closet. On the other hand, debtors have been known to take their jewelry to a pawnshop pre-filing so that their goods are no longer in their possession at the time they create their Schedule B.
- Firearms. If an individual has one weapon that they use for hunting, they may not remember it when in the depths of completing their bankruptcy paperwork. However, an entire collection of guns left off the schedule may be an intentional omission.
- Fur coats. This luxury item may be omitted from the schedule with the intent to avoid selling it. If a person is in a position where they must file bankruptcy, a fur coat that is a family heirloom could potentially be claimed as an exemption. But if there are multiple furs, omission by the debtor is probably their attempt to keep them.
- Vehicles. It seems impossible that someone could forget about a vehicle they own, but it happens. Shared interest in a vehicle driven by someone else, including vehicles secured by loans co-signed by the Debtor should show up on Schedule B. Also, if the Debtor sold a costly vehicle to a friend or family member for a minimal amount pre-filing, that transaction may indicate an intentional act to keep from listing the vehicle as part of the Debtor’s assets.
- Interests in companies. It’s possible that the debtor has an interest in a company and are only peripherally aware of it, such as when they gave $500 in start-up funds to someone trying to get a company off the ground in exchange for one share in the company. However, it’s also possible that they have a large interest in a company that somehow didn’t make it onto Schedule B.
- Accounts receivable. A person could fail to include all the receivables they anticipate. If the debtor isn’t great at bookkeeping, they may not make a complete listing of the monies they have due to them.
How Omitted Assets from the Debtor’s Bankruptcy Schedules Can Affect You
If you believe that the debtor intentionally omitted assets from their Schedule B, you may wish to launch an investigation to discover what assets have been hidden. An experienced attorney can help you explore avenues that may uncover assets that could be used to repay the debt owed to you. Even if the omitted assets don’t cover the entire amount you’re due, you might be able to obtain some monies against the debt.
Call Crawford & von Keller, LLC Today for Help Protecting Your Rights
If you are a creditor that is concerned about consumer debts owed to you being discharged in bankruptcy, we’re here to help. We have decades of experience representing creditors and helping protect their rights. To find out your legal options if a borrower is seeking to discharge their debt with you, call the North and South Carolina creditors’ rights attorneys at Crawford & von Keller, LLC today at 803-790-2626.