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Business Owner files for Chapter 7 Bankruptcy but does not list asset on the bankruptcy filing, can anything be done?

Natrona Heights, PA |

A business owner of an LLC contractually owes me about $20,000. This business owner filed for Chapter 7 Bankruptcy after I had taken him to common pleas court civilly to pursue collecting this debt. However, on his bankruptcy filing he did not list an asset which is valued at $300,000 which is in both his personal name, and the business's name.

I thought most assets were not exempt from being listed on bankruptcy filings? Should I inform the trustee of this? This asset is a piece of property owned by this debtor but is not his residence.

Attorney Answers 5

  1. The information you are not addressing is whether the asset was listed in the bankruptcy petition. If this asset was listed, the trustee will make an determination whether the asset will be administered on behalf of the estate. If the debtor failed to list the asset, then yes you should contact the trustee.

  2. In many instances, a debtor will file a "skeleton petition" containing little information beyond the list of debts and will have a couple of weeks to "fill out the skeleton" by amending the missing information. The proper party to contact if the debtor does not amend the petition to list every asset is the office of the United States Trustee as well as the panel trustee assigned to the Debtor's case. Hope this perspective helps!

  3. You have several options, however, you really need to retain a lawyer to determine the proper course. You could report it to the trustee, to the US Trustee, or even file an objection to the debtor receiving a discharge or to the dischargeability of your debt. These are not easy issues to resolve and there are up sides and down sides to each course of action. What I am saying is that you should do nothing without getting advice of bankruptcy counsel, and not just any attorney, but one that is experienced in creditors rights.

  4. In order to determine whether he accurately listed his ownership interest in the property, you and your attorney need to look the Schedule A, if it is real property, or schedule B if personal property. If it is real property then you may be able to obtain a copy of the deed showing ownership from the appropriate recording office. If he does have an interest in the property, you would want to provide a copy of the deed to the trustee and the U.S. Trustee's office. Undisclosed property is generally never exempt and can be sold to benefit creditors by the trustee.

  5. If there is an undisclosed asset, you should report it to the Trustee. There could be assets enough to pay your claim. However, this is a complicated area of the law and you need an attorney to advise and protect your rights.

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