A suit for damages is an asset that must be disclosed in your bankruptcy schedules

Must I Disclose a Potential or Existing Lawsuit in My Bankruptcy?

Yes. The number one rule of bankruptcy is full disclosure. In exchange for debt relief, debtors agree to lay their assets and liabilities on the table for review by the Bankruptcy Court and trustee. This strikes some as fairly invasive, but it is part of the deal if you wish to gain a fresh start financially.

Lawsuits are Assets

Most people are familiar with their assets and debts and don’t have any issues listing them with the help of their bankruptcy attorney:  a car is a car, credit card debt is debt etc. The disclosure process appears straightforward. However, many bankruptcy filers are unaware that an interest in a potential lawsuit is an asset that must be disclosed in their schedules. This is the case because a potential or existing lawsuit can result in the debtor receiving money, that if non-exempt will need to be distributed to creditors.

You’ve Got to Name It, to Claim It

Failure to list a potential lawsuit will result in a waiver of your claim. That’s right, if you don’t disclose a potential lawsuit in your bankruptcy schedules, you’ll be barred from asserting the claim at a later date. So remember, if you have a case, whether it be based on personal injury, mortgage fraud or some other cause of action, you have an asset. All assets must be listed in your bankruptcy schedules…no exceptions.

If you have questions, talk to a bankruptcy attorney.