Non-exempt equity for vehicle in anticipation of filing chapter 7

Asked over 1 year ago - Los Angeles, CA

I'm just wondering if all exemptions have been exhausted, and there is a small portion of the auto that cannot be exempted ($2500-3000), will the trustee usually go after this amount in most cases ?

Attorney answers (7)

  1. Brian Crozier Whitaker

    Contributor Level 17

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    Answered . That will depend on who your Trustee is and the level of his/her greed. Don't forget to value the vehicle at its fire sale net liquidation value.

  2. Ryan Duane Childers

    Pro

    Contributor Level 5

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    Answered . In my district it depends entirely on the Trustee. Many times the Trustee will threaten to liquidate the vehicle in an effort to extract a cash settlement. Keep in mind that a Trustee's compensation is very minimal, and they receive a percentage of all assets they recover for creditors, so, there is financial incentive for the Trustee to liquidate the asset, or get you to pay up to keep the asset.

  3. Misty Ann Perry-Isaacson

    Contributor Level 3

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    Answered . The Chapter 7 Trustee has a duty to liquidate non-exempt assets for the benefit of the bankruptcy estate's creditors. However, that does not mean that the Trustee will liquidate an asset with minimal equity just because he/she has the ability to do so. Costs of the administration, which include the cost to sell the asset, are part of a Trustee's analysis when determining whether it is cost prohibitive or effective to liquidate property. The Bankruptcy Code, Rules, and/or Chapter 7 Trustee guidelines do not mandate a minimum/maximum threshold for the sale of assets.

    There is no general rule and each Trustee handles administration of their cases differently. I always advise my clients that there is no guarantee that a Trustee will not liquidate an asset even with a small amount of equity. However in my experience, most Trustees are willing to negotiate a buy back of the estate's interest from the Debtor, if they have the ability to do so , before liquidating the and incurring additional fees associated with a broker/auctioneer sale of a vehicle.

    This is why it is always important to prioritize your goals for a bankruptcy filing and advise your attorney what they are. The Attorney will then be able to educate you on the best way to protect your assets.

    The material on this website is for informational purposes only and is not intended to be legal advice or a... more
  4. Russell Kieth Marne

    Contributor Level 2

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    Answered . Yes, as long as the Trustee can make a meaningful distribution to your unsecured creditors.

  5. Susanne Ruiz Rodriguez

    Contributor Level 13

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    Answered . That varies a lot from jurisdiction to jurisdiction. Please consult an experienced bankruptcy attorney in your area.

    The answers to these questions may be different depending on your individual circumstance and should not be... more
  6. Diane L Gruber

    Pro

    Contributor Level 18

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    Answered . In the District of Oregon the trustee would. In your district, not sure. Discuss with bankruptcy attorney.

    Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662.... more
  7. Gary D. Bollinger

    Contributor Level 19

    1

    Lawyer agrees

    Answered . Get an appraisal from an auto liquidator, you may be reassured.

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