Bankruptcy

Chapter 7 Trustees Offer Debtors Practical Tips Concerning Valuation And Buy-Backs Of Personal Property

By Jonathan Alper

The bankruptcy committee of our local Bar association holds monthly luncheons. At the most recent luncheon two Chapter 7 bankruptcy trustees discussed the bankruptcy process from the trustee?s point of view and offered a few good suggestions to debtors? attorneys. One of there comments concerned the treatment of debtors? household furnishings. Florida law provides each debtor with a $1,000 total exemption for all personal property including bank accounts and household furnishings. This exemption is small compared to most other state?s laws. In practice, few trustees pursue personal property valued slightly over the exemption nor challenge property valuations in most Chapter 7 petitions unless there is a clear reason to doubt the debtor?s property list.

At the bar meeting the trustees suggested that the Chapter 7 trustees may be taking a closer look at personal property lists and values. They indicated that most trustees may be sending an appraiser to the debtors homes to take an inventory whenever the debtor?s home is valued more than $500,000. It is hard to believe, they said, that a home worth more than a half million dollars in today?s real estate market contains less than $2,000 (joint filing) of furniture and electronic equipment. The trustees stated that bankruptcy debtors whose homes and personal property lists will likely be scrutinized consider hiring their own appraiser to value their property before they file their petition and submit their own personal property appraisal to the trustee.

It costs only two or three hundred dollars for an appraisal of household property. In the past, when my clients? income or house size implied expensive furnishings I have suggested the client retain one of the appraisal firms used by the Chapter 7 trustees so that the trustee would not challenge the appraiser?s credentials.

Whenever a debtor suspects that his personal property schedules will be questioned by the bankruptcy trustee it is a very good ideal to get a preemptive appraisal. When you hire the appraisal you schedule the date and time of the appraisal. You?ll know well in advance when this appraiser will be going through your home to inspect your belongings. Your own appraisal is not binding, and you don?t have to use the results on your petitions is you disagree in good faith with the appraiser?s report.

The trustee speakers offered debtors another practical suggestion when the debtors know they have non-exempt personal property including furniture or automobiles. Typically, trustees and bankruptcy debtors negotiate the amount and terms of the debtor?s "buy-back" of non-exempt cars and personal property at or after the trustee meeting. These trustees suggested that debtors decide what they would like to offer the trustee in payment and then bring a cashiers check for the amount of their offer to the trustee meeting. In other words, make your offer an literally put the cash on the table. The trustees said they are usually willing to accept significantly lower valuations and buy-back offers when the offer is accompanied by certified funds.

Full post as published by Florida Bankruptcy Law on February 28, 2010 (boomark / email).