The popularity of cryptocurrency is on the rise. It’s not only Bitcoin or Dogecoin that are available for individuals to purchase — there seem to be new types of cryptocurrency developed every year.
What is Cryptocurrency?
Cryptocurrency is a digital currency that takes the form of “coins” or “tokens” and is less susceptible to counterfeiting via cryptography. Even though cryptocurrency is still relatively new, it’s estimated that one in five people has invested or traded this type of currency.
If a person who files for bankruptcy owns cryptocurrency, they may think that this asset will not be visible to the court and therefore choose not to list it in their schedules filed with the Court. However, this is not correct and could subject the person to both civil and criminal penalties, including possible incarceration.
Cryptocurrency must be disclosed just as one would disclose a bank deposit or any other investment or asset. This means an individual will need to list it in the schedules filed with the bankruptcy court. This is due to the fact that cryptocurrency notwithstanding its somewhat "stealthy" nature is nevertheless an asset and all assets must be disclosed in a bankruptcy proceeding. Failure to do so could result in an individual’s case being dismissed or criminal charges. And with evolving technology available and broad investigatory powers, trustee's in bankruptcy are now on the lookout for such assets.
Disclosing your cryptocurrency to your counsel may allow for pre-bankruptcy planning which will shelter some or all of the value of this asset. Obviously, nondisclosure to counsel eliminates this possibility and leaves the person filing for bankruptcy relief and their assets at great risk.
Those who own cryptocurrency generally know that it is a volatile asset. As a result, its value can go up or down rapidly, impacting a bankruptcy proceeding. Therefore, careful planning with an experienced bankruptcy professional prior to filing for bankruptcy relief is critical.
How Weintraub Zolkin Talerico & Selth Can Help
While cryptocurrency is a new and exciting asset, it’s important to understand how it can impact your bankruptcy case before making any decisions. If you have any questions about your specific situation, it’s best to speak with an experienced bankruptcy attorney, like the team at Weintraub Zolkin Talerico & Selth, who can help you navigate the process.
Experience true debt relief by setting up a consultation with us today. Contact us online or call (310) 220-4147