When filing bankruptcy you must provide a list of all of your assets in the schedules section of the bankruptcy petition. Assets include things like your car, house, television, clothing, and everything else you own. Assets also include things like life insurance policies, the right to collect a debt owed to you, and a cause of action for an injury. These last three assets can be easy to forget and difficult to value. A life insurance policy may only have value if you are the beneficiary and the insured passes away. A debt owed to you only has value if there is the possibility of collection. A cause of action only has value if the other party is willing to settle or if you are successful in litigation. Despite the intangible nature of these types of assets, they must be listed in the bankruptcy schedules.
When a cause of action is not listed in a bankruptcy petition the debtor risks giving up the right to pursue the lawsuit because of judicial estoppel. Judicial estoppel prevents a party from taking a position in a legal proceeding and then taking a contradictory position in another legal proceeding. For example, if you are a defendant in a criminal trial for driving drunk and your defense is that you were not in the car, you cannot later take the position that you were injured while in the car in a civil lawsuit to recover money damages for your injury. Similarly, if you don’t list a cause of action in your bankruptcy petition, you may lose the right to later sue and recover money for your injury.