Often during bankruptcy, a lot of assets are under the scanner. Especially, in chapter 7, one might end up with many assets. However, not all assets are lost. There are certain exemptions that are available to safeguard some of the necessary assets of the bankruptcy filer. These assets are known as exempt assets. These must be indicated in the bankruptcy form. The form can be amended later and the assets you wish to retain or claim an exemption can be indicated. This can be done before the creditor’s meeting. Know more about bankruptcy procedures and other codes at https://www.recoverylawgroup.com/bankruptcy/. A key example of an asset that is exempt in most situations is clothes. Unless clothes have some diamond studded to them or if it is made of some rare fur or animal skin.
What could be non-exempt assets?
Nonexempt assets can be in simple words the assets which do not have any exemption applicable, or the filer has already used all the exemptions and the asset cannot be exempted due to the ceiling. These assets must be provided to the bankruptcy trustee for liquidation and settling of some of the debts of the debtor. There can be situations when the bankruptcy trustee might abandon a particular asset for various reasons. Such an asset might be returned to the debtor despite being nonexempt. Some of the examples, of why a trustee would abandon a particular asset-
If an asset is very delicate and requires a significant cost of maintenance, the asset might not be worth the sale or it might not be feasible for the bankruptcy trustee to go through the liquidation process. Vintage assets or collection of some rare currencies, documents, etc. In situations, where sales can be completed quickly with a minimum maintenance cost, bankruptcy trustees might still try to liquidate debt assets. However, if the asset provides significant yield and is worth taking the maintenance concerns, the bankruptcy trustee might consider liquidating a high-maintenance asset as well. The bankruptcy estate will be the source of recoupment for all costs relating to the sale, maintenance, and any other costs incurred while the sale.
Time of sale
If an asset takes way too long for sale and does not receive much response on different selling platforms, it can be abandoned by the bankruptcy trustee. There can be situations where a particular asset requires small repairs to be resold and there is no guarantee to find a worthy buyer even after repairing or restoring the asset. In such situations considering the whole process might take months, the bankruptcy trustee might redirect a nonexempt back to the debtor.
Some assets might be of value, but they have significant hardship to sell, and it might be something that can be returned to the debtor. For instance, a non-popular website, which could be a business property or an individual’s asset might not find many buyers even though it is valuable, and a lot of money has gone into it while creating the same. If any asset of insignificant value has a sale hardship, the asset can be ignored by the bankruptcy trustee for liquidation purposes.
Value of the asset
The potential result of selling a particular asset after the trustee commission and cost of sale should be of some value. Any asset that has a potential of less than $2k and isn’t liquid enough, the bankruptcy trustee wouldn’t bother liquidating the same. Depending on the debt amount and the lender’s due, if $5k worth of assets also has a negligible impact, the bankruptcy trustee might not consider putting time and effort into assets below $5k.
So, from the above set of examples, many assets can be safeguarded by the debtor by use of exemptions smartly. Even a few of the nonexempt assets can also be safeguarded. To ensure, you are not missing out on these exempt and nonexempt assets during your bankruptcy, dial 888-298-6203 to connect with the best attorneys from Los Angeles & Dallas, TX now!