Bankruptcy

What Assets Will the Trustee Take Away When I File my Bankruptcy in Arizona?

By Joseph McDaniel, Esq.

I once saw a very nice couple lose four vehicles with a combined value of about thirty-five thousand dollars, but they had received exactly zero legal advice, because they had filed a bankruptcy that had been typed up for them by a document preparer.

Now, there might be some people who would be well-served by using a document preparation company (essentially, a specialized typing service that is prohibited from giving legal advice), but these poor folks certainly were not; and an Arizona bankruptcy attorney particularly hates to see scenes like that.

Still, in most cases, a debtor loses exactly zero; and accordingly, the statistics reflect that more than 95% of cases in Arizona are "no-asset" cases, where the trustee takes away nothing from the debtor.

The debtor, after all, gets to keep all his exempt assets in a bankruptcy case; and all her over-encumbered stuff, assuming that she's current, and she jumps through a few other hoops; and he also gets to keep anything that is essentially worthless, like the 40th largest string collection in the State of Arizona.

The usual items I see trustees take include a non-exempt automobile, a piece of unencumbered real property, jet-skis and boats, time-shares, and tax refunds that arrive after the date of filing the bankruptcy.

I have noticed, over the years, that Harley-Davidson Motorcycles and diamond rings are the topic of many discussions with an Arizona bankruptcy lawyer. Nobody has the same kind of emotional charge on their BMW.

Note that comic book collections and beanie baby collections have values that are easier to determine than the value of diamonds, so don't think that your Golden Age Green Lantern No. 1 (with the Green Lantern whose ring is operated by magic, and affects anything unless the object is made of wood, as opposed to Green Lantern #2, whose ring works on anything except yellow-colored objects) will stay yours unless you are willing to buy it back from the Trustee after you file.

Note, however, that all those assets, whether exempt, over-encumbered, or worthless, all need to be listed on the schedules.

Note as well that non-exempt assets are often sold prior to filing to buy food, pay on a mortgage, and for other living expenses, although there are risks that need to be understood ("pigs get fat, and hogs get slaughtered") prior to that process.

But here's a short video about the issue, and I'll generate a longer one when I get a Round Tuit!

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NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on August 24, 2010 (boomark / email).