Posted: April 13, 2020
The answer is yes. Other than a few narrowly defined exceptions, new assets that are obtained by a person after a Chapter 7 bankruptcy case is filed are not included in the bankruptcy and you may keep those assets away from your creditors.
When a person files for Chapter 7 bankruptcy, a bankruptcy estate is created, that includes all pre-petition assets that a debtor either owns outright, or has an equitable interest in (such as you purchased a car for your child, the title is in the child’s name, but you bought the car with your money.) Bankruptcy Code Section 541(a)(1). Pre-petition assets may be liquidated (sold) by a Chapter 7 Trustee to pay your creditors. However, most debtors keep assets that they own, which will be safe from sale by a Trustee as a result of asserted asset exemptions, or by the fact that there is a mortgage or car loan that reduces or eliminates any net value to the estate. There is a bright line test. Everything you already own when you file your bankruptcy is a “pre-petition” asset; nearly everything you obtain after you file bankruptcy is a “post-petition” asset.
The vast majority of “post-petition” assets are not property of a bankruptcy estate. If a person purchases a lottery ticket and wins, AFTER the bankruptcy is filed, that is a post-petition asset obtained subsequent to the creation of the bankruptcy estate. As a result, the Chapter 7 Trustee would have no ability to take possession of that asset and use it to pay creditors.
Bankruptcy is a very complex legal process, with significant benefits for those people in need of its protection. It is critical that you consult with an experienced bankruptcy lawyer to go over all of your options and to understand your rights. Kirschenbaum & Kirschenbaum has over 45 years’ experience in dealing with all bankruptcy matters. Please contact one of our attorneys today.
For assistance with all Bankruptcy matters, please contact us:
Ken Kirschenbaum, Esq. (516)-747-6700 Ext. 301 or
Stacy Spector, Esq. (516)-747-6700 Ext. 304 or