Duty to Disclose
When you file for protection under the bankruptcy code, you must disclose all assets, property, and money that you own at the time of filing. This includes anything that you are currently entitled to in the future. If people owe you money or you have accounts receivables, then those need to be disclosed. For example, if you are a real estate agent and have listings for sale, then the commission on the listings, could be an asset, and therefore must be disclosed on your bankruptcy documents. Failing to list all your assets can be considered bankruptcy fraud.
Prior to filing bankruptcy, your attorney will ask you many questions about your property, assets, and financials. The questions may feel intrusive, but you should answer them honestly. Your attorney’s job is to look at everything you own and determine whether they can protect it when you file bankruptcy. If they do not believe you can protect it, then they can discuss your options inside and outside of bankruptcy. They will not be able to discuss these options unless they know exactly what you own.
Gifts and Property Received after Filing Bankruptcy
You must disclose everything you own prior to filing bankruptcy. However, if you receive property after filing bankruptcy, there are times when you must disclose property received after filing bankruptcy as well. For example, if you “entitled” to life insurance benefits or an inheritance 180 days after filing bankruptcy, you must disclose it to your bankruptcy trustee. The inheritance or life insurance benefit becomes part of the bankruptcy estate and could be used to pay your creditors.
In almost all other situations, any other asset received after filing bankruptcy is not part of the bankruptcy estate. Therefore, you technically do not have to disclose the property received after the case is filed. However, there are times when you may want to disclose the asset to the bankruptcy trustee. Before you do anything, you should always consult with your bankruptcy attorney. As stated above, your attorney’s job is to review all the information and provide you with options. In some situations, you might want to disclose the newly acquired property, so the trustee does not think you are hiding anything. If you are upfront with the trustee, then there is nothing for them to investigate. The trustee cannot liquidate property that is not part of the bankruptcy estate anyway. Therefore, speak with your attorney to determine the best option for your specific situation.