The debtor has no cash to his name and his real property is mortgaged. All of his wealth is tied up in bonds. Where to find them?



The nice thing about bonds is that they generate income. Unlike a piece of real estate or a certificate in a company, bonds are meant to throw off cash on a regular (not discretionary) basis. That cash has to move and there needs to be a record of it, and records mean it’s easier to track down an asset.

Better yet, the record is being kept by someone who is not a co-conspirator with the debtor. While debtors can tell friends or relatives to hold money for them and not to tell anybody, a corporation or government is going to keep a register of who owns its bonds and where to send the interest payments.

In fact, companies employ transfer agents to keep track of who owns their bonds.

A little vocabulary could go a long way when it comes to U.S. government debt. If you ask your debtor whether he owns “bonds,” he could say no when he owns U.S. Treasury debt that matures in less than a year, because such bonds are known as “bills” or “T-bills.” Ask about those too, as well as bonds with maturities at issue of between two and 10 years (known as Treasury notes).

Tax returns done properly will provide evidence of bond ownership because interest payments are declarable income. U.S. Treasury bonds pay interest every six months. However, municipal bonds are not taxed at the federal, state or (where applicable) municipal level. Another kind of bond that may not appear on a tax return until it’s sold is a so-called zero-coupon bond, which pays no interest and acts more like a regular non-installment loan. U.S. Treasury bills (short term bonds) work this way, as do some corporate bonds do too. Others are taxed as if they pay interest even though they don’t.

Before we get to tax returns, we often get nice leads from records just lying around or sometimes in our client’s possession because of joint bank accounts. These sometimes provide extremely useful information. Every bond carries its own individual CUSIP number (this stands for Committee on Uniform Securities Identification Procedures).

Say you see a piece of paper or a bank statement with a nine-figure sequence composed of mostly numbers but some letters too, like this: 4465XHPP9. That’s a CUSIP number. Anyone with a brokerage account can search a security by CUSIP number to find out whether it’s a valid security. If it is, your debtor’s bond may just have revealed itself.