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Regarding bankruptcy trustee selling non-exempt property if it would not be worth his while after covering state's exemption.

Hudson, MA |
Filed under: Bankruptcy exemptions

Practically, I understand that perhaps a trustee may not decide to sell property unless the value of the non-exempt portion, after the costs of storage & sale are deducted is high enough to make it worth the trustees while.
For example, the Fed bankruptcy exemption is $ 3225 for a vehicle (but where can one get a vehicle for that amount these days!).buying a vehicle for $ 10225( a $7K diff.) would it possibly be worth the trustees while to get his 25% ($1750 commission not to sell the property? I know this is a "judgement cal, but does anyone know if there is a "rule of thumb" as to where, expressed as a dollar amount or percentage where generally & empirically there exists a "decent" amount remaining for unsecured crs. to generate a "decent" commission for the trustee? Thank-you!

Attorney Answers 1


The $3,225 exempted amount is equity, not total value. I bring this up because you mentioned that one could not get a vehicle for that value.

Another overlooked issue is that trustees get paid hourly for legal services, hiring trhemselves as their counsel, and then the percentage for the actual trustee non-attorney work. Sometimes a judge might limit total compensation to one or the other, the percentage or the hourly fees.

Up to about a year ago, one could safely figure on a $2,000 cushion above exemptions and costs of sale before a trustee would get interested. Today, Washington is pushing heavily for trustees to get involved for less so I have to warn clients that anything over $1,000 might cause interest. On the other hand, a trustee recovering an asset solely to pay the trustee fees and liquidation costs, with nothing for the creditors, has been heavily frowned upon for years.

Leaving aside the particular question you asked, what a rule of thumb might be, there also is the emotional extortion issue. A trustee might not have any intention of selling your car but she certainly knows you cannot survive without it, even if only for a couple of months until the trustee decides it cannot be sold at a high enough price, so her hand is out and reaching into your pocket for a cash settlement. Do you feel lucky, Punk? Well, Do You???

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