The scenario is not all that uncommon, a person filing for Bankruptcy decides not to tell their bankruptcy attorney about an asset, for this example, a debt owed to them, or an interest in an oil and gas lease. The reasons may be many, inconsequential value, lack of record keeping, family legacy, or just plain fear of loss and greed. The Petition and schedules get filed, the first meeting of creditors comes off without a hitch, no one files any objections to discharge or dischargeability, a discharge is issued, and the case is closed. The debtor thinks they are in the clear. Problems solved.
Then, the dormant asset, the lease that hasn’t produced in years, the receivable that was thought long dead, comes to life and cash starts to flow from the asset. Who does the money belong too? If you think it is the Debtor that is wrong. The money belongs to the Bankruptcy Trustee.
It works that way because when a person files for bankruptcy everything in the universe that they own or have any rights to become the property of the estate. Only the assets that have been listed as exempted by the debtor are returned to them as exempt and only the assets listed in the schedules that are abandoned and not administered by the trustee go back when the case is closed. In other words, everything goes in, but only the stuff listed properly comes back out. As a kicker, there is no statute of limitations on this issue because the Trustee owns the omitted property as a matter of law and the debtor’s interest is not open and notorious enough to constitute adverse possession.
So, listing everything is really important in the Bankruptcy context.