Debtor Obligated to Disclose Assets Acquired During Life of Bankruptcy Plan

Additional Bankruptcy Cases to Consider Regarding Estate Property#8 of 8 in Series — Previous Article #7: Additional Bankruptcy Cases to Consider Regarding Estate Property

In the end, we take the conservative approach and believe that the debtor has an ongoing duty to disclose any significant assets that are acquired during the life of the plan, including causes of action, inheritance, increases in wages, and other windfalls.

In return we have found that the trustee will allow the debtor more leeway in determining which portion of that asset is not disposable (but will be necessary for the support of the debtor and the debtor’s dependants).

In addition, the scheduling of causes of action will give the debtor standing to bring a cause of action and will eliminate a judicial estoppel defense. There is little doubt that an intentional failure to disclose a claim will not be looked upon favorably in the other court regardless of whether the debtor claims that the mistake was inadvertent or that the debtor failed to list the potential asset on the advice of bankruptcy counsel.

Finally, trustees and creditors need to be mindful of the debtor’s valuing of the cause of action and its applicable exemption so as to avoid a situation where the debtor undervalues the claim in the schedules and later enjoys the windfall of a substantial award or settlement.

Sources: [1] Cornell University Law School Legal Information Institute; [2] Justia; [3] OpenJurist; [4] CaseText; [5] CourtListener; [6] Leagle; [7] Chapter11Cases

Disclosure required by 11 U.S.C. § 528(a)(3): We, the law office of Tom Scott & Associates, P.C., are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

 

Stop the Stress and Regain Your Life!

Click to Call Us from Mobile PhoneEmail Us to Schedule Free ConsultationDon't delay! Schedule a FREE consultation today!

CLICK TO CALL US

—  or  —

EMAIL US

*Disclosure required by 11 U.S.C. § 528(a)(3): We, the law office of Tom Scott & Associates, P.C., are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.