Question: I have a question related to bankruptcy and my Bitcoins. I need to declare bankruptcy to get out from under a lot of debt. I owe loans, credit cards and I have some medical bills. I had my hours cut at work and then I tried to start a consulting business for the movie industry and I had to borrow money and use my credit cards and it hasn’t been profitable enough. I make some money, but the sales aren’t enough to pay back all the money I’ve borrowed.
Things got worse after surgery on my back and I needed a lot of pain pills and now I’m dealing with an opioid addiction and getting therapy. Also, my wife left me for a foreign guy she met at work, so that’s another income that isn’t paying the bills any longer.
My question is actually about the cryptocurrency known as Bitcoin and whether I have to tell anybody that I have some of it. I started investing in Bitcoin because I have a friend who works on Wall Street at a big bank and he does cryptocurrency research. He said Bitcoin was going up in value and that I should buy some. He’s usually right about investments, so I bought some Bitcoins. They have since gone way up in value and my original investment is now worth about $75,000.00. I invested in it at the right time and my profit is pretty big. But even if I used the Bitcoins to pay my creditors, I still would be almost $150,000 short of paying everyone.
I writing to you to find out if I have to admit anywhere that I have Bitcoins that are worth about $75,000. I don’t mind disclosing it, although my wife will want some, but I’d rather not and I want to know if a bankruptcy court needs to know.
G.J. in Cumming, GA
Answer: Generally speaking, if you want to file bankruptcy you need to disclose your assets. Assets can take many different. They can be cash, real property like your primary residence or an investment house, stocks, bonds, pensions, art and even Bitcoins.
Since Bitcoins, a decentralized digital currency, have value, they need to be disclosed on a bankruptcy petition. The price of a Bitcoin, like a stock or a bond, can fluctuate from day to day. We have helped clients properly value their Bitcoins.
In fact, as so-called cryptocurrencies have gained increasing popularity, we have had more and more clients who have had them. We have assisted clients not only with Bitcoin (which was designed by Satoshi Nakamoto who implemented the first blockchain as a security measure) but with other digital currencies like Ethereum, Ripple, Litecoin, NEM and Dash, to name a few of the more popular varieties.
But just because someone owns Bitcoin does not mean it will definitely impact their bankruptcy. It all depends on the value of the Bitcoins or other cryptocurrency. These assets can be very volatile in terms of their value. It may or may not affect whether someone can file a chapter 7 or a chapter 13. That’s why we do a comprehensive financial assessment to determine how the asset (in your case Bitcoins) impacts a bankruptcy filing, if at all.
When you need a Cumming bankruptcy lawyer to answer your questions, we’re here for you.