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Your Property May Not Be Worth Much – Which Can Help You in Bankruptcy


In the world of bankruptcy, the value of your property matters. This is because you get a certain dollar figure’s worth of exemptions—that is, the value of property that is protected from being taken from the bankruptcy court. That means that unlike in the real world, in the bankruptcy world, the less your property is worth, the better for you that is.

Why Value Matters

Let’s look at the personal property exemption, which allows you to keep between $1,000 (if you are protecting a homestead) or $5,000 (if you’re not protecting a homestead) worth of personal property.

Because you keep any and all property that adds up to those numbers, the more property you can fit into the exemption, the better it is for you.

For example, assume you have the full $5,000 personal property exemption. You could fit, let’s say, a musical instrument that you own that is worth $3,999 and that would be the entirety of your exemption. However if that instrument is actually worth $3,000, you now have an extra $1,000 to use to protect your other personal belongings from being taken.

This means that the less your stuff is worth, the more you keep, and the better it is for you.

Your Personal Property

Many people look around their home and they see computers, TVs, a microwave, a full closet of clothes, and books, and they think that their property must be worth more than the $1,000/$5,000 limit. However, this is not the case.

Most of your property is not worth nearly what you think it is. Value, for the purposes of bankruptcy court, is what your property would sell for on the open market. Think of what your property would be worth on eBay or Craigslist or similar sites.

You may have paid $2,000 for that big screen TV three years ago. However, today that TV may be worth, at most, $200-$300. Used property that is years old, with wear and tear, and where technology has advanced, usually has very little value.

Some of your property has almost no value. Have you ever seen people give away couches for free on Craigslist? It happens all the time. A lot of your furniture or household belongings have no value–meaning you keep it without “eating up” any of your exemption limit.

Even things with nominal value are often safe. The bankruptcy trustee has no interest in trying to sell your 10 black party dresses, unless they are near new or from some designer label that would fetch significant money on the open market.

Cost of Sale & Repair

The court also has to take into account the cost of selling and repairing the items it takes.

Take a car, for example, which generally gets an exemption limit of $1,000. If your car has $2,000 in equity, you may fear that it will be taken. But selling a car at auction costs money. The trustee has no interest in this, and in fact you can fight against the trustee taking a car with a value of $2,000, where it would cost nearly $1,000 to list and auction the car. This is especially true if the car would need repairs to be sellable.

Do you have questions about bankruptcy? We’ll help you understand what you can anticipate in your bankruptcy. Contact a Boca Raton bankruptcy attorney at the Law Offices of Stephen Orchard at 561-455-7961 for a consultation today.

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