What happens to crypto if you file for bankruptcy?

When you file for personal bankruptcy in the US, crypto you own is treated as property of your bankruptcy estate. It has to be disclosed, and what happens next depends on whether you file under Chapter 7 or Chapter 13. How creditors reach crypto outside bankruptcy is covered in can crypto be garnished.

What happens to crypto in personal bankruptcy?

The federal courts' guide to Chapter 7 says filing creates an estate that holds your legal interests in property as of the filing date, including some property held by others in which you have an interest. A Fredrikson and Byron analysis says debtors must list all cryptocurrency as assets, citing the Bankruptcy Code's rules on estate property.

Debtors can keep some property under exemptions, either the federal list or their state's, and many states require use of their own. Whether any exemption protects crypto depends on that law, so the answer varies by state.

A crypto company going bankrupt while holding your coins is a different situation, covered in what happens if a crypto exchange goes bankrupt.

Do you have to disclose crypto in bankruptcy?

Yes. Debtors must file schedules of assets, debts, income and expenses, and a statement of financial affairs. At the meeting of creditors, usually held 21 to 40 days after filing, you answer questions under oath about your finances and property.

Leaving crypto out can be costly. The courts' Chapter 7 guide says a discharge can be denied if a debtor concealed property or cannot explain a loss of assets. In a 2018 Massachusetts case, In re Carmack, the court denied a couple's discharge after they failed to disclose a small bitcoin holding and an online stock account, a law firm analysis notes. In September 2025, the Justice Department said a Texas debtor who ran a crypto firm as a Ponzi scheme was denied discharge of over $12.5 million in debts after allegations of concealed assets and false oaths. Blockchain records can help trustees follow coins, as can cryptocurrency be traced explains.

What happens to crypto in Chapter 7?

A Chapter 7 trustee sells property that is not exempt and pays creditors from the proceeds. Most individual cases are "no asset" cases where nothing is distributed, the courts' guide notes. A sizable crypto holding that no exemption covers is the kind of asset a trustee may sell. Valuation can be contested, since courts have given little firm guidance on valuing bitcoin, Fredrikson notes.

What happens to crypto in Chapter 13?

Chapter 13 is for people with regular income who want to keep their property and repay debts over three to five years. You can usually keep your crypto, but the plan must give unsecured creditors at least as much as they would get if your assets were sold in Chapter 7. Selling crypto can also have tax effects, as crypto losses and taxes describes.

This is general information, not legal advice. Bankruptcy and exemption rules vary by state and change, so check the court, the US Trustee Program or a qualified bankruptcy attorney for your own situation.