The bankruptcy schedules require the person filing bankruptcy to list all of their “property.” Most honest debtors have little trouble with listing houses, cars, and household goods.
Property also includes bank accounts, investment accounts, IRA’s, and insurance policies, things with less of a tangible nature, but still things we deal with every day.
What even the diligent debtor sometimes forgets are legal rights: the right to a tax refund; the right to sue for injury; a fixed right to a portion of a probate estate. Lawyers call these things choses in action.
Since the debtor’s bankruptcy estate includes all legal and equitable interests, it is essential to think beyond the tangible assets when doing the schedules. Failure to do so can have unpleasant consequences. The bankruptcy trustee can move to deny a discharge to a debtor who fails to fully disclose his assets. More frequently, a debtor who tries to litigate an unscheduled legal right after the bankrutpcy may find that he loses the case because, in the bankruptcy, he failed to list the claim in question. The moral is: leave it out and lose it.
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