What is an asset in bankruptcy?

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In a Nutshell

Everything you own or have an interest in is considered an asset in your Chapter 7 bankruptcy. Whether the bankruptcy trustee will use an asset to pay your creditors depends on whether the asset is protected by an exemption. Even if it's not protected, the asset itself has to be of enough value to make selling it worh the trustee's effort.

Written by Kristin Turner, Harvard Law Grad.  Reviewed by Attorney Andrea Wimmer
Updated July 22, 2020


Everything you own or have an interest in is considered an asset in your Chapter 7 bankruptcy. Whether the bankruptcy trustee will use an asset to pay your creditors depends on whether the asset is protected by an exemption. Even if it's not protected, the asset itself has to be of enough value to make selling it worth the trustee's effort. Most of your debts will be eliminated once your bankruptcy discharge is granted, so it makes sense that your creditors would receive at least some of the money that you owe them. It is the trustee's job to figure out if you have anything that they can sell to pay your creditors.

If you are worried that the trustee will sell everything you have, don't be! The reality is that trustees can only take things that are not covered by an exemption, and they will usually only take things that can be easily sold for a good amount of money.

The pots and pans you have been using for the last ten years? The trustee is almost certainly not going to take those.

The brand new boat you bought two years ago? If it is not covered by an exemption, the trustee is selling that sucker for sure.

Some other assets that trustees might seize include:

  • Valuable personal property (think expensive watches and jewelry, high-end electronics, and fancy furniture)

  • Cars, trucks, and recreational vehicles (That 1970 Datsun? Probably fine. Your new Tesla? Not so much.) 

  • Expensive pets and animals (They're probably not coming after Rover the mutt, but your peacocks and racehorses are going on the block.)

  • Real estate

  • Certain types of retirement savings (Your  401k and IRA are safe, but your stock-portfolio probably isn't.)

  • Cash-value life insurance

  • Inheritances (that you're eligible to receive at the time of filing your case or within 6 months thereafter.)

  • Interest in a business (if it has significant value.)

  • Intellectual property rights like patents (if they have significant value.)

  • Proceeds from pending lawsuits (that you are likely to receive.)

There are no hard and fast rules about which assets trustees will sell. In the majority of cases we have seen, the trustee didn't take anything. Remember that the trustee is not out to get you -- they will only take your property if it is worth their time to do so. In most cases, it isn't. 

You still need to tell us about ALL of the things you own. This will show the trustee that you are acting in good faith and will make them more likely to recommend your bankruptcy for approval. We've got your back -- if it looks like you own something that the trustee might sell, we will let you know.



Written By:

Kristin Turner, Harvard Law Grad

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Kristin is a recipient of Harvard Law School’s Public Welfare Foundation A2J Tech Fellowship. At Harvard Law, she served as a member of the Harvard Defenders, the Women’s Law Association, and the Harvard Law Negotiation Review. She was the 2016 – 2017 president of the Harvard Bla... read more about Kristin Turner, Harvard Law Grad

Attorney Andrea Wimmer

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Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team full time in August 2019. While in private practice, Andrea ha... read more about Attorney Andrea Wimmer

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