Any future interest in any property or money due to you at the time you file a bankruptcy case is an asset or property under the bankruptcy laws. For example, future interests include commissions, residuals and other future payments.
For example, I have seen a situation where a debtor received residual checks for advertisements that she acted in. The checks continued to come in long after she completed the job. In the debtor’s bankruptcy case, the trustee considered the checks an asset and wanted to sell it for a lump sum. In other words, the trustee searched for someone to buy the entitlement. Bankruptcy allows the trustee to do this. On the other hand, if the residual is minimal, the trustee will “abandon the asset” because it is not worth it to administer the checks.
Accounts Receivables and Commissions
Like residual checks, accounts receivables and commissions are also property. The same thing goes for lawsuits. If the Debtor has a claim against a third party, the trustee can sell the Debtor’s claim. In this scenario, the Debtor must participate in the lawsuit. All assets and property are worth something. A pencil is worth something. Debtors must list all of this property when filing for bankruptcy. The trustee will examine all of the debtor’s property to determine whether he can liquidate or sell the property to pay creditors.
On the other hand, the debtor can keep certain property up to certain amounts. These are called exemptions in bankruptcy. Exemptions are used by debtors to save certain necessary property such as homes, cars, clothing etc. However, the exemptions can only be used up to a certain amount in most cases. Anything over that amount is unprotected property. The trustee can sell that property for the benefit of people and companies that the debtor owes money to. For more information contact our bankruptcy attorneys at Tran Bankruptcy Law. We service all of Southern California, including Orange County, Los Angeles and Riverside, California.