Figuring out what an asset is when filing for bankruptcy can be tricky. Learn what an asset is for your bankruptcy forms and the bankruptcy trustee.
In Chapter 7 Bankruptcy, assets are anything you own that the trustee could sell to pay back your creditors. Most of your debts will be forgiven once your bankruptcy is approved, 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 he or she can sell to pay them back.
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.)
Certain types of retirement benefits (Your 401k and IRA are safe, but your stock-portfolio probably isn't.)
Cash-value life insurance
Inheritances (that you are likely to get -- they're not taking the one you might get in 20 years.)
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.