You Forgot to List an Asset During Bankruptcy: Now What?

Leaving assets out of your bankruptcy case, even if it is an honest mistake, could have serious consequences for you and your ability to repay creditors.

For example, the court might deny you a debt discharge for not listing assets, meaning you could have to pay off unsecured debts you assumed would be erased. If the court has already discharged your debt, it might revoke the discharge for failure to disclose assets. Furthermore, there are criminal consequences for not listing assets, as this is typically considered bankruptcy fraud. To avoid this situation, let our lawyers completely overhaul your assets and finances before filing your bankruptcy petition. When preparing your case, we can identify all assets and the necessary exemptions to protect them from liquidation if you file Chapter 7.

For a free case assessment from Young, Marr, Mallis & Associates, call our bankruptcy lawyers now at (215) 701-6519 or (609) 755-3115.

Can You Get a Debt Discharge if You Forget to List an Asset During Bankruptcy?

Intentionally or mistakenly leaving assets out of your bankruptcy case could seriously hurt it and your chances of getting a discharge.

When you file your bankruptcy case, you must inform the court of all your assets. This is necessary whether you file Chapter 13 or Chapter 7. The list of assets helps to explain your financial situation and gives the court a better understanding of your ability to repay creditors.

The court could deny you a discharge if you do not list all assets in your bankruptcy case. Debt discharges relieve debtors of their liabilities to repay certain creditors. For example, credit card debt is typically dischargeable in bankruptcy, regardless of the chapters debtors file. The appeal of a debt discharge is attractive to many debtors, especially those with considerable unsecured debts. Not getting a debt discharge when you expected to could make you liable for repaying more debts than you anticipated, which might derail or lengthen your case. If you have already received a debt discharge and the court learns you forgot to list assets, your discharge might be revoked.

Neglecting to list certain assets, especially during Chapter 7, might be a serious issue. Chapter 7 is a liquidation bankruptcy. To repay creditors for non-dischargeable debts, debtors identify assets for liquidation. While creditors can protect some assets from liquidation, such as their homes or cars, they must use liquidation exemptions to do so. Some states, like Pennsylvania, let debtors choose between state and federal exemptions, as federal exemptions typically cover more assets.

Is Forgetting to List an Asset During Bankruptcy Illegal?

Bankruptcy is a legal process that goes through the courts and lets people struggling with debt address it. The process itself is highly regulated, and missteps, especially ones as egregious as failing to list assets, could result in criminal consequences for debtors.

Under 18 U.S.C. § 157, bankruptcy fraud includes cases where debtors intentionally file fraudulent petitions with the court or make false or fraudulent claims or representations in their cases, including failing to list assets. Penalties for bankruptcy fraud include fines of $250,000 per violation and up to five years in jail, or both. These are serious consequences; even debtors who mistakenly leave assets out of their bankruptcy cases might be penalized. Fines associated with failure to disclose assets are not dischargeable should a debtor file for bankruptcy again shortly.

How to Make Sure You List All Assets During Your Bankruptcy Case

Debtors can rely on our lawyers to organize their assets and financial information, prepare their bankruptcy petitions, and identify state or federal exemptions that could shield their assets from liquidation in Chapter 7 to ensure they list all assets during their bankruptcy cases.

Organizing Assets and Financial Information

Our bankruptcy lawyers will start by reviewing your assets and finances in full. Tell our lawyers about all assets you hold, including any and all real estate, cash, investment accounts, vehicles, and other potential assets. You should list all secured and unsecured assets to ensure you do not leave anything out of the petition.

Overhauling your financial information might take some time, and our lawyers must do this before filing the bankruptcy petition and getting an automatic stay to relieve you of creditors’ harassment. Because of this, you should not delay initiating your bankruptcy case if you are overwhelmed with debt. The longer you wait to file, the more interest might accrue on unpaid debts and the greater your repayment responsibility might become.

Preparing the Bankruptcy Petition and Identifying Liquidation Exemptions

Our attorneys can assess your household’s current income, number of dependents, and monthly expenses when preparing your bankruptcy petition to see how quickly you can repay creditors based on your present financial situation. While preparing a petition for Chapter 7, our lawyers can identify exemptions to shield assets from liquidation. Some debtors might not list assets for fear of losing them, like a home or car. Carefully picking liquidation exemptions or seeing if your income qualifies you to file Chapter 13 could let you keep the desired assets using the right channels without risking losing a bankruptcy discharge or facing criminal consequences for bankruptcy fraud.

Before filing your petition with the court, our attorneys will ensure it is complete and accurate. In addition to listing all of your assets, our lawyers must also give the court a detailed assessment of your total debts, a full list of your creditors, and other financial information, like your monthly income and expenses. The court bases debt discharges and repayment plans on this information, so it must be wholly accurate. Because the bankruptcy process is extremely complex, debtors risk leaving out important information if they file without legal assistance.

Call Our Attorneys to Start Your Bankruptcy Case Now

Call Young, Marr, Mallis & Associates at (215) 701-6519 or (609) 755-3115 to discuss your case for free with our Philadelphia bankruptcy lawyers.