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After filing a Chapter 7 Voluntary Petition, am I allowed to sell or return personal property items listed on Schedule B?

Nashville, TN |

The combined value of all my personal property is less than the maximum allowed exemption.
I am referring to property that I own and no creditor otherwise has a security interest in.

Attorney Answers 4

Posted

Generally, it isn't wise to dispose of exempt personal property until you have received your discharge - or at least until the trustee files his/her "no asset" report with the US trustee's office.

The answers to these questions may be different depending on your individual circumstance and should not be considered as legal advice or the establishment of an attorney-client relationship.

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Posted

Technically, no. Until your bankruptcy is closed, all assets, exempt or otherwise, belong to the bankruptcy estate.

As a practical matter, will anyone care....depends on what sort of items we are talking about.

But the legal answer to your question, no, you cannot sell anything until your BK is closed (or the trustee affirmatively abandons the property, which doesn't normally happen except in certain circumstances).

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Posted

You can sell exempt items once the trustee has filed a "no asset" report (happens quickly in most cases in MI). It is not clear what you mean by returning something - this implies a security interest, which you say is not the case. Unless you converted non-exempt cash to exempt property prior to filing, and are now proposing to return the property in exchange for the cash. This would be an indication of bad faith and bankruptcy fraud, which could result in a denial of discharge and/or fines and prison. You need the advice of a local bankruptcy attorney.

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2 comments

Asker

Posted

I appreciate the thorough and helpful response. No bad faith or fraud exists. The manufacturer of an item has decided to repurchase that item, due to improper marketing specifications they supplied to their retailers.

Alan D. Walton

Alan D. Walton

Posted

The fraud and bad faith issues are always considered by trustees, which is why I raised them. Your circumstances may require adjusting your schedules if the sums involved are substantial. Review the details with your attorney to see if this will be necessary.

Posted

You should wait until the Trustee files his final report on the court docket. Even if property is 'claimed' as exempt, the trustee has a chance to object to your claimed exemptions on schedule c, thus it is part of your BK estate.

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