One of the biggest fears people have about filing for bankruptcy is losing their possessions. Many people avoid filing, even to the point of causing more financial damage, all because they want to continue living in their homes or driving their cars. But do you really need to worry about losing these things if you file? What happens to your bankruptcy assets after you file?
Exempt or Non-Exempt Asset?
Successful bankruptcies start with knowing how to handle property when you file. This means understanding the difference between an exempt and a non-exempt bankruptcy asset.
When you decide to file for bankruptcy, your attorney will help you determine which of your assets qualify as an exemption and which do not. Exempt assets typically include the things that people are most concerned about – their primary homes and their primary vehicles. Those can be protected depending on your situation and you won’t need to worry about bankruptcy making you homeless or forcing you to use only public transportation. Your lawyer will review your specific circumstances and help you create a list of exemptions.
Non-exempt assets, in theory, must be handed over to the bankruptcy trustee to be liquidated.
But the process isn’t as simple as this.
There are cases in which property ends up back in your possession even without listing them as exemptions. Some trustees just decide not to liquidate a possession. But sometimes someone filing for bankruptcy gets the opportunity to buy back some bankruptcy assets.
What Are Some Reasons a Trustee Might Decide Not to Liquidate Bankruptcy Assets?
Your bankruptcy trustee might not be your favorite person, but you can’t deny he or she has quite a bit of information to organize and tasks to carry out in settling your bankruptcy case. It’s for this reason that many decide to forego liquidation of certain assets. This is a decision that usually works in your favor.
Trustees must determine if it’s worth the value they’ll receive to deal with the liquidation of an item. If it seems as if the time invested in liquidating the item will cost them more than they’ll get to turn over to creditors, chance are they’ll not bother with it.
To determine more about how personal property is valued in bankruptcy, check out this info from Nolo.com.
A trustee might not have an interest in liquidating bankruptcy assets because they are:
- Too expensive to maintain. If it’s going to take weeks or months to sell the asset and a great deal of effort is required to maintain it, it might not be worth the trade-off.
- Too difficult to sell. Some possessions are so personalized or niche selling them is impossible. As anyone who has listed a valuable “one-of-a-kind” item on eBay to sell, you often need to wait months for just the right buyer to come along. This is time a trustee doesn’t have.
- Limited value. Some assets just don’t have enough value to bother selling. Trustees earn their income based on a percentage of what they recover for creditors. Investing time in an asset that’s only worth a few hundred, or even a few thousand dollars, just isn’t worth the effort.
Trustees tend to look at the big picture when it comes to bankruptcy estates. If selling an asset takes time and effort, it’s more fiscally beneficial to them to not sell that asset and just move on with the case.
Working with a Bankruptcy Attorney Helps You Protect Your Assets
If you’d like to know more about protecting your assets or you have questions about what will happen to the property the trustee of your case liquidates, we can help. Contact the Law Office of Robert M. Geller at 813-254-5696 for more information.