These days, almost everybody has some method for sending or receiving money online – and PayPal has long been one of the most popular. A lot of people use their PayPal accounts for small transactions with friends and family and as a way to buy or sell things on sites like eBay, Craigslist and Etsy.
What happens, then, when you file for bankruptcy? Do you have to list your PayPal account, even though it’s “just virtual?”
You could get into big trouble if you don’t disclose it
When you file for bankruptcy, you have to list all your assets and financial accounts – and that includes virtual accounts like PayPal. Whether you have $1 in there or $1,000, it needs to be disclosed to the court. If you fail to do so, you can end up in serious trouble with the bankruptcy trustee, who may refuse to grant you a discharge or even accuse you or intentional fraud.
This is particularly true if you have used your PayPal account as a source of income for gig work or eBay sales. Not only does the bankruptcy court need to know what assets you might be holding in your income, but the trustee also needs to know the source of those assets. In a bankruptcy, all income sources – even ones you may personally consider trivial – have to be reported.
None of this is to say that you’ll lose what you have in your PayPal account, especially if you use it to hold the money for your bills. However, you could be required to turn over a large balance, since the court may see that as an asset that could be used to partially repay your creditors.
Filing for bankruptcy can feel overwhelming. However, you can get through the process much more easily with experienced legal guidance.