How to list your assets in bankruptcy

Listing personal property is something that your bankruptcy attorney will do when they prepare the bankruptcy petition.  It is  important to be thorough as failure to list an asset can jeopardize your bankruptcy discharge. Schedule B makes one list of everything you have from cash on hand, checking accounts, savings accounts, household goods, clothing, cars, retirement accounts, life insurance policies, stocks, bonds, injury case proceeds, inheritance proceeds.  Schedule B is a very complete exhaustive section, whereby the debtor must disclose everything that he or she has in their possession.

How detailed must I be?

However, that does not mean every single item in the house has to be listed and itemized.  What we do as your attorney is we know what the court allows, what the trustees allow and what the code provides for.  In many cases, this can be a matter of local custom, with each bankruptcy jurisdiction doing things slightly different.  I like to estimate the value of household goods.  We will estimate clothing, and we will estimate other items that you might have in your possession like hobby equipment, collectibles, and things like that.  It is not necessary for you as the client to make a complete inventory listing of everything that you have and put a value on it.  We are just looking for items with value and accurate estimates.

You Don’t Need to Disclose a Salt Shaker but Jewelry and Other Items With Value Must be Disclosed

If you disclose everything you have with reasonable certainty you’re going to be fine.  Where you might run into a problem is if you have a very expensive item that you neglect to tell me.  For example, you might say you have a piano, but you don’t acknowledge that it’s a Steinway piano worth $25,000.00.  That would be an asset that would be subject to being taken by the trustee, and I would advise you not to file a Chapter 7 bankruptcy unless you are willing to part with that piano.  So as long as you do a reasonable effort in determining what you have and what your property is worth, we can disclose it on the bankruptcy petition with confidence.

Exempting Property

Schedule C of the bankruptcy petition is the exemption schedule.  This is where we protect that property using Illinois exemption laws.  For example, you can protect up to $2,400.00 worth of equity in a vehicle.  You can protect up to $15,000.00 worth of equity in real estate.  You can protect all of your necessary clothing.  You can protect all of your 401(k) or retirement benefit, and you can protect a miscellaneous $4,000.00 that you can sprinkle over any personal property to protect it.  So in 99 percent of our Chapter 7 bankruptcy cases there is a finding of no assets, meaning the trustee does not find any property that’s not exempt, that he or she can sell and pay creditors a pro rata share.

So you don’t have to worry as a client when you hire my law firm.  My law firm is going to go over your documents.  We’re going to scrutinize the property.  We’re going to place the proper exemption on that property so that you don’t have to worry about that property being taken.  The worst thing that can happen in a Chapter 7 case is to have property taken from a client.  I would rather the client do a Chapter 13 and repay the equivalent of what that property would be worth rather than do a Chapter 7 and lose the property.  Very rarely, if ever, do clients lose property in a Chapter 7.  Most times when property is lost in a Chapter 7 it is property that was either undisclosed or undervalued to the point where the debtor should have known that, one, the property should have been disclosed or, two, that they were underestimating the value to the point where they shouldn’t have.