Will winnings be taken in banko?
August 28, 2010 1:28 PM Subscribe
YANML: If you are receiving a lump sum after filing bankruptcy, but BEFORE the bankruptcy is discharged, can that be seized as an asset?
I am severely in debt, and have been preparing for a Chapter 7 Bankruptcy. I recently won an amount on a game show that is nowhere near the amount of my debts, but I will not receive that money for at least six months. I had planned on filing my bankruptcy within the next three months. If I do so, will my winnings be taken away, since they are not an asset at the time of filing?
I am severely in debt, and have been preparing for a Chapter 7 Bankruptcy. I recently won an amount on a game show that is nowhere near the amount of my debts, but I will not receive that money for at least six months. I had planned on filing my bankruptcy within the next three months. If I do so, will my winnings be taken away, since they are not an asset at the time of filing?
I believe that you need to declare ALL of your assets (even if you haven't received them yet) when you file. To not do so would be fraud. Plus you were on a GAME SHOW so it isn't like no one knew you won.
posted by MsKim at 2:49 PM on August 28, 2010
posted by MsKim at 2:49 PM on August 28, 2010
It is a current asset -- accounts receivable and other sums owed to the debtor are considered assets. You may be able to exempt it, but you definitely need to list it on your schedules and treat it as an asset. If not, even if you could have exempted it, if/when the trustee finds out about it, Bad Things can happen.
Are you planning to retain an attorney? They'll be able to help you plan your exemptions best (e.g., spending down an account on property with unlimited exemptions, etc.) and will know the ins and outs of the state where you must file.
posted by katemonster at 2:55 PM on August 28, 2010 [1 favorite]
Are you planning to retain an attorney? They'll be able to help you plan your exemptions best (e.g., spending down an account on property with unlimited exemptions, etc.) and will know the ins and outs of the state where you must file.
posted by katemonster at 2:55 PM on August 28, 2010 [1 favorite]
I would not be worried about them taking your winnings away. I'd be worried this being fraud, and the whole bankruptcy being revoked. From the US Federal Courts website:
"The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor, if the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee, or if the debtor (without a satisfactory explanation) makes a material misstatement or fails to provide documents or other information in connection with an audit of the debtor's case. 11 U.S.C. ยง 727(d)."
posted by Houstonian at 3:01 PM on August 28, 2010
"The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor, if the debtor acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee, or if the debtor (without a satisfactory explanation) makes a material misstatement or fails to provide documents or other information in connection with an audit of the debtor's case. 11 U.S.C. ยง 727(d)."
posted by Houstonian at 3:01 PM on August 28, 2010
This is one of those things where a lawyer is your best choice for answers. Trust me when I tell you that you do not want to try to file bankruptcy without a lawyer. The laws have changed, and they were complex before the change...don't try to do this from a book or the nolo site. (Which I love, don't get me wrong...but this...this is one where you pony up and pay the attorney.)
All that said; I believe the winnings count as an asset, even if the asset isn't yet realized...but I could be wrong. Ask your attorney.
posted by SecretAgentSockpuppet at 3:35 PM on August 28, 2010
All that said; I believe the winnings count as an asset, even if the asset isn't yet realized...but I could be wrong. Ask your attorney.
posted by SecretAgentSockpuppet at 3:35 PM on August 28, 2010
The prize is absolutely an asset that you'll need to divulge to the bankruptcy court. It accrued to you the day you won it, not the day you receive the check.
If it's more than $400, the game show has to report your prize as miscellaneous income to the IRS. Bankruptcy is all about determining your assets and debts, down to the penny, as of the date of bankruptcy. There's simply no way you're going to be able to hide the money. You're much more likely to discover new assets and liabilities that you didn't know you had.
Get a lawyer for the bankruptcy. There's no context here in which economizing on legal fees makes any sense.
posted by gum at 11:39 AM on August 29, 2010
If it's more than $400, the game show has to report your prize as miscellaneous income to the IRS. Bankruptcy is all about determining your assets and debts, down to the penny, as of the date of bankruptcy. There's simply no way you're going to be able to hide the money. You're much more likely to discover new assets and liabilities that you didn't know you had.
Get a lawyer for the bankruptcy. There's no context here in which economizing on legal fees makes any sense.
posted by gum at 11:39 AM on August 29, 2010
While it is true that getting a lawyer is a good policy ... I will quietly suggest that if your financial position is pretty simple, you can get away without a lawyer.
I filed a few years ago, using the advice in the Nolo Press book. I didn't have much complexity, the worst thing was an automobile loan that I'd co-signed for; my bankruptcy discharge was straightforward and happened three months after I filed. As a matter of fact, the trustee (the guy you'll have most dealings with) told me that my bankruptcy filing was neater, and more complete, than most bankruptcies filed by attorneys representing clients.
Bankruptcy isn't really that hard when you remember that being scrupulously honest is rule #1.
posted by dwbrant at 11:07 AM on August 30, 2010
I filed a few years ago, using the advice in the Nolo Press book. I didn't have much complexity, the worst thing was an automobile loan that I'd co-signed for; my bankruptcy discharge was straightforward and happened three months after I filed. As a matter of fact, the trustee (the guy you'll have most dealings with) told me that my bankruptcy filing was neater, and more complete, than most bankruptcies filed by attorneys representing clients.
Bankruptcy isn't really that hard when you remember that being scrupulously honest is rule #1.
posted by dwbrant at 11:07 AM on August 30, 2010
This thread is closed to new comments.
posted by rmhsinc at 2:37 PM on August 28, 2010