Written by San Francisco bankruptcy lawyer, Jeena Cho

I always tell my clients that there are 3 rules in bankruptcy - disclose, disclose, disclose. In exchange for getting rid of all (with few exceptions) of your debts, you agree to complete disclosure of your financial world. This includes not only your debts but all of your assets too.

Let’s talk about 3 common mistakes people make when listing assets.

1. Overvaluing. In law school, one of my professor used to say - what’s priceless to you may be worthless to everybody else, which is a very difficult thing to value. For example, your pet(s). I know your dog may fetch your newspaper in the morning, cuddle with you when you watch TV, and you wouldn’t sell him at any price, but chances are, your dog is worth $0. Unless you have a show dog, or he stars on his own TV show, he’s worth $0. (Please don’t take this to mean I dislike dogs. I love dogs.) For the purpose of your bankruptcy, this is actually a good thing because the trustee won’t have any interest in taking him.

When you list your assets on the bankruptcy petition, the value you use is what you can get for the property in its current condition - NOT the amount you paid to buy the item new.

2. Not having a basis for the value. Frequently, people will just have assumptions about how much something is worth - your home, cars, timeshares, beanie baby collections, heirloom from great aunt, etc. However, the client won’t really have anything to back up those numbers. This is not the time to play “let’s guess the value.” It’s time to go out and get concrete numbers. If you have anything you do not want to lose in bankruptcy, do your home work and figure out how much it’s worth. Check ebay, craigslist, local antique stores, used car lot, etc. to see how much a comparable item sells for.

3. Not disclosing. When you file for bankruptcy, there is a trustee assigned to your case. One of the jobs of the trustee is look for assets that you did not disclose on your bankruptcy petition. If you intentionally hide assets and do not list on your bankruptcy petition, that is fraud - punishable by prison time. It’s really a bad idea and one sure way to have the asset taken from you.

Remember, disclose, disclose, disclose!

Disclaimer: Unfortunately, it is impossible to give legal information over the internet, no matter how well researched or written. Before relying on any information I give, contact a lawyer to discuss your particular situation. I am a San Francisco bankruptcy lawyer. The information given is based on California law.

Image Credit: athies

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