What Counts as an Asset to the Bankruptcy Court? - Westgate Law

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What Counts as an Asset to the Bankruptcy Court?

Some consumes fear filing for bankruptcy because of what they think the will have to give up. We all work hard for what we have. Even if what we have isn’t much, we still don’t want to have to give it up and start over. It makes bankruptcy seem like less of an option and more of a punishment. But if you file for bankruptcy, the bankruptcy court isn’t going to view every last item you own as an asset. Assets as defined by the bankruptcy court may be very different than “asset” as defined to you, the individual in need of a bankruptcy discharge.

For instance, you need not fear that the California bankruptcy court is going to take small items you deem valuable like your TV or computer or DVD player. They don’t want your old, used personal property. In most states, the bankruptcy court and your creditors aren’t even set up to repossess personal items. They would need facilities to store them and the ability to sell them once they’ve been repossessed. To ensure that your bankruptcy court does not repossess personal items, contact an experienced bankruptcy attorney in your state. There are a few exceptions (by state) in which personal property could be at risk.

When seeking bankruptcy protection, you are assigned a trustee who will look at your list of assets and income to determine how to administer unprotected assets to pay your creditors. If you have a secured item, i.e. car, jewelry, furniture loan, etc. creditors can take the items used to secure the loan back upon non-payment. When we discuss what assets and personal items can be used to pay back your creditors during the course of bankruptcy, we aren’t discussing items used to secure loans. Secured loans are entirely different.

Bankruptcy law is the same throughout the entire country, but each state makes exemptions on their own. These exemptions that are made at the state level, determine what can and cannot be protected from the bankruptcy trustee’s reach when finding assets to utilize in repaying your creditors. The trustee uses your bankruptcy schedules to determine whether or not you have unprotected assets that should be used to repay creditors. In the vast majority of cases, the trustee isn’t interested in your personal/household items (TV, couch, etc.) with a few exceptions. But these exceptions were based on very specific cases where personal property appraisers were needed to itemize household goods and determine their potential value. But there’s no bankruptcy trustee who is going to send out a personal property appraiser for your Target towels and IKEA couch.

Bankruptcy trustees are looking for bigger assets like: equity in your home, vehicle equity, non-ERISA qualified investment accounts, bank accounts, etc. as well as possible inheritances or pending litigation that could result in a settlement.

If you are filing for Chapter 7 bankruptcy and you want to discuss in detail what you own that would be considered an asset and what items you own would be safe throughout the bankruptcy process, contact the southern California bankruptcy attorneys at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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