The bankruptcy law doesn't define the term "asset" in the definition section of the law. Defining that word for clients is left up to bankruptcy attorneys.
The Merriam-Webster dictionary defines an asset as "the entire property of a person, association, or corporation, or estate applicable or subject to the payment of debts."
Well...that definition doesn't clear things up so lets try it another way.
If you can sell it, spend it, trade it, or save it--then it is an asset!
The bankruptcy law requires you to disclose on your bankruptcy papers all of your assets. It doesn't matter if it was given to you, or you found it, or if its worth just a penny. If you can sell it, spend it, trade it, or save it--then it is an asset!
With that basic definition of what an asset is lets take a look at some of the different types of assets that you can have, because you DO have assets. Everyone who files bankruptcy has assets of some kind. I've never had a client yet who has had no assets.
Real Property (more commonly known as "real estate")
Basically, real property consists of houses/cabins/structures on land and just land.
Just as vehicles have titles that list who owns the vehicle, real estate has deeds or certificates of title that show who owns the real estate. Generally, if your name is on the deed to the real estate, even if your name is listed with some other person(s) then you have at least partial ownership of that real estate and it is an asset of yours. It is an asset of yours even if you don't live there or never go there. If you're unsure if you have real estate, your bankruptcy attorney can help you investigate that.
Personal Property (more commonly known has "stuff")
Here is a list of common "stuff" people have that needs to be listed as assets:
- Cash on hand
- Checking/savings accounts
- Household furnishings
- Sporting/hobby equipment
- Mutual funds
- Retirement accounts/pensions
- College savings accounts
- Hot tubs/pools/pool tables
Here is a list of common assets people have that they don't always remember they have:
- Life insurance policies
- Tax refunds from prior years that are owed to you
- Tax refunds from the current year that you will get next year
- Any money owed to you (loans you gave to friends/family; even renters deposits)
- Accounts receivables owed to you or your business
- Money you are entitled to receive in the future (This one can include a lot of things like: money you could get from a personal injury lawsuit if you were hurt before your bankruptcy; back alimony or child support; royalties from a book you published before your bankruptcy.
Even though you are required to list all of these assets in your bankruptcy papers you still have those bankruptcy exemptions ("bankruptcy protections") to help you keep most, and usually all, of your assets.
So remember: If you can sell it, spend it, trade it, or save it--then it is an asset!
Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at firstname.lastname@example.org.