What are Contingent Assets and Should You Worry About Losing Them?
If you are considering filing for bankruptcy, you may be giving a lot of thought to the things you own to see if they are at risk of being taken during your bankruptcy. While in most cases, people do not lose property in bankruptcy, that’s a valid thing to at least consider (at least, before you speak to your bankruptcy attorney to make sure whether your concerns are valid or not).
What About Contingent Assets?
But you may have an asset that you are not even thinking about: Contingent assets. Contingent assets are property or things of value that are coming to you, or that are owed to you, but that you do not actually have yet.
Some examples of contingent assets include:
- Lawsuits in which you could receive money, such as personal injury cases, employment cases, or breach of contract cases (sometimes called unliquidated claims, where the value of the claim is unknown)
- Security deposits that are owed back to you from a landlord
- Commissions that you have earned, but which have not been paid to you yet
- Inheritances that are about to be given to you
- Insurance company money for a claim that you have made, and which has been approved, but which has not been paid
The bankruptcy rules require that you disclose contingent assets. When it comes to lawsuits where you could receive money, that includes situations where a lawsuit has not even been filed yet. For example, if you were in an accident, you have made a claim against the other side, but you haven’t actually sued, you would still need to list the potential claim as a contingent asset.
How Much is the Contingent Asset Worth?
Sometimes, you don’t know the value of a contingent asset. For example, you may know exactly what security deposit is due back to you from your landlord, but you may not know how much money, if any, you will receive in an employment discrimination lawsuit. The value of the lawsuit may also depend on your chances of success; a case where your damages are $100,000 may be worth near nothing to a bankruptcy trustee if the case looks like it will be impossible to win.
You will have to list the claim on your bankruptcy schedules, and then estimate what you feel the value of the claim is (with the help of your bankruptcy lawyer). If you do not list a potential lawsuit, you could lose the right to bring your claim for the money in whatever court your lawsuit is or will be filed in—even if the bankruptcy court never discovered your omission.
Losing Contingent Assets
In some cases, the bankruptcy trustee may opt not to take the contingent asset, especially in lawsuits where the maximum damage value is relatively little. Even if the trustee does take the claim, depending on how much debt you are having discharged, losing the ability to bring a lawsuit for a small dollar figure may be a small price to pay in return for your bankruptcy discharge.
The West Palm Beach bankruptcy lawyers at Kelley, Fulton & Kaplan at 561-264-6850 can help you fill out all the necessary paperwork in the best possible way to help your chances of obtaining a bankruptcy discharge. Call today for a consultation.