The digital age we live in has made life easier in many ways. For example, remote working, online shopping, and communication devices. None of that would be possible without the marvels of modern technology. However, as amazing as the digital age can be, it can also muddy the waters of standard practices and leave people with many questions.
In the world of bankruptcy, many people come across the term “digital asset” when researching and filing for bankruptcy. Due to its more recent surge in relevance, many individuals find themselves confused about what it means. If you are considering filing for bankruptcy, you need to know all about what a digital asset is.
What is a Digital Asset
As we have moved into the modern digital age, what is considered an asset has evolved to include the tech world. That means that items that are stored electronically but can be bought, sold, transferred, traded, or owned are considered property within bankruptcy.
According to the tax definition, a digital asset is something that has a digital representation of value. It is also recorded on a cryptographically secured, distributed ledger or similarly functioning technology.
What is an Example of a Digital Asset?
As defined above, a digital asset is something that can be bought, sold, transferred, traded, or owned and is considered property within bankruptcy. This definition includes cryptocurrencies, such as Bitcoin and Stablecoins. Cryptocurrency is a form of digital currency that utilizes cryptography to secure transactions. The definition also includes Non-Fungible Tokens (NFTs). NFTs, at their most basic terminology, are one of a kind or limited digital assets; they often come with works of digital art, photos, videos, games, and other creative works. To ensure their authenticity, NFTs will have unique identifiers and codes.
The Importance of Proper Disclosure
Full disclosure of all assets is required during bankruptcy proceedings. If debtors fail to list digital assets, it could lead to penalties, including dismissal of the case or accusations of bankruptcy fraud. Since digital assets often fluctuate in value and can be easily overlooked or hidden, it is important to thoroughly assess one’s digital footprint and report all holdings.
How to Navigate Bankruptcy with Ease
Navigating bankruptcy can feel stressful and intimidating. Not only is it a difficult decision to make, but there are also complexities with filing. Every t must be crossed, and every i must be dotted when filing for bankruptcy; the stress of going through financial hardship can make that hard to manage. That is where the services of an experienced bankruptcy lawyer can help!
Bankruptcy lawyers are able to help you navigate the complexities of bankruptcy, including figuring out if you potentially have any digital assets. Furthermore, they will help to ensure that no stone is left unturned. From ensuring you have all of your proper paperwork filed to helping you achieve the best potential outcome; they are there to help make the bankruptcy process seamless.
If you are exploring the bankruptcy options, see this checklist for how to prepare for bankruptcy.