Every wallet, exchange account and hardware device holding cryptocurrency must be listed on your bankruptcy schedule. Bitcoin, Ethereum and NFTs are considered property under federal law, not currency, so trustees treat them accordingly. Leave one out and the consequences will fall on you, not on the coin.
Cryptocurrency Is Property, Not Cash, Under the Bankruptcy Code
Whatever you’re holding, when you file for bankruptcy, it becomes part of your estate under 11 U.S.C. § 541. This section also covers your bank accounts, car, and furniture. A California court has made this clear in In re Hashfast Technologies. They ruled that Bitcoin is not a dollar-equivalent but rather intangible personal property. This classification matters because it means a trustee can track, value, and, in some circumstances, seize it.
Chapter 7 Trustees Can Take and Sell Non-Exempt Crypto
In a Chapter 7 bankruptcy case, the trustee’s job is to liquidate what isn’t exempt and distribute the proceeds to creditors. Cryptocurrencies that exceed your available exemptions work the same way as boats or rental properties. If they are not exempt, the trustees will demand access to your wallet and sell your holdings. The swings in cryptocurrency prices can complicate this process. A trustee monitoring the value of a coin has every incentive to sell quickly, before the price changes on them.
That’s the trade-off built into Chapter 7. You get a faster case, but you also lose control over the timing of the sale.
Chapter 13 Lets You Keep Your Crypto, at a Price
Chapter 13 works differently. You don’t liquidate assets. Instead, you propose a repayment plan that runs for several years and allows you to keep your property, whether digital or not. However, keeping non-exempt cryptocurrencies isn’t free. According to 11 U.S.C. § 1325, your plan must pay unsecured creditors at least the same amount that they would receive if your case were a Chapter 7 liquidation. If your cryptocurrency holdings were sold and distributed during a Chapter 7 proceeding, their value would be added to what your Chapter 13 payment plan covers.
Valuing a Volatile Asset Creates Real Disputes
Real estate holds its value for months at a time, whereas cryptocurrency doesn’t. Courts generally value cryptocurrencies as of the filing date, but a case may run for years, and a coin that was worth little at the beginning may be worth a lot by the time the trustee sells it. Some courts have begun to reassess values periodically instead of locking in a single value. This approach protects creditors from debtors who filed low and benefited from a rally. It also means that you cannot assume that the number on your petition is the final word.
Georgia’s Exemptions Offer a Narrow Shield for Digital Assets
Georgia has no special exemption for cryptocurrency. Instead, there is a wildcard exemption under O.C.G.A. § 44-13-100 which allows you to apply limited protection to any property of your choice, including cryptocurrencies. Homeowners have an additional cushion if they are not using their full homestead exemption, while renters and those without home equity have less room to work with. In either case, the wildcard seldom covers a serious investment on its own, regardless of whether it is held in a hardware wallet, exchange account, or NFT that one would rather not part with.
Hiding Digital Assets Is Not Actually Hidden
Blockchain transactions leave a permanent, searchable trail. Trustees now routinely use forensic tools built for exactly this, and they can subpoena exchanges directly for account records. An undisclosed wallet doesn’t stay undisclosed for long, even if you think nobody else knows about it. Get caught, and the penalties go well beyond losing the asset. Courts can deny your discharge entirely or refer the case for bankruptcy fraud. Disclose everything upfront, and crypto becomes just another asset that the court sorts out through the normal process.
Get Your Digital Assets Reviewed Before You File
Crypto ownership changes the math in almost every bankruptcy decision. It determines which chapter of the bankruptcy process fits your situation and how much of your payment plan goes toward covering the debt.
At Duncan Bankruptcy Law, we help Georgia filers correctly account for digital assets from the start so that nothing catches them or the trustee by surprise later. If you own cryptocurrency and are considering bankruptcy, contact us today to schedule consultation.
