Why Evaluating Your Property Before Bankruptcy Is Important

Why Evaluating Your Property Before Bankruptcy Is Important

When you file for bankruptcy, one of the first things that you will be required to do is to make an honest evaluation of all the property that you own. The reason for this is that the bankruptcy trustee assigned to you will take all of your assets that are non-exempt and make a determination as to whether they can be sold in order to pay back your creditors.

And this is probably the most critical part of your filing. The court requires you to itemize all of your assets on paper and provide it to both the trustee and the court when you show up at your court to get approval for your bankruptcy application. The items you include on this report will largely determine what you have left once the bankruptcy proceedings are done with.

And here is where you have to be careful. Whatever you do, you should never attempt to conceal any assets that you have. A number of people filing for bankruptcy attempt to hide monies or properties in an effort to not lose them during bankruptcy. But if your deception is discovered, as it is in many cases, your bankruptcy request will be disallowed and you will not get the debt relief that you want.

And, you should also be aware that lying on a bankruptcy application or filing knowing false information is considered fraud and punishable by both fine and possible jail time.

It is best to tackle the problem in an orderly fashion. To evaluate your property, start with a worksheet. Divide it into two sections, left and right. List all of your assets on the left side. On the corresponding right side, list the replacement value of the asset. This is the amount that it would cost someone to buy the item at current market prices.

Said another way, assuming that you are the owner of a 10 year old automobile. You would simply find the price from the blue book entry and subtract the cost of any repairs it requires. The trustee uses this estimate to determine the amount of monies that could be obtained from the item if it were to be auctioned or sold.

So it may be a strange thing to say, but from your standpoint, the less the item is worth the better it is for your bankruptcy outcome. This is because bankruptcy trustees are basically paid on the commissions they get from selling your property.

Therefore, when evaluating your assets, it you possess some properties or items that are not worth much on paper, he may very well come to the conclusion that it is not worth his time and effort to sell it. In this case you would retain the item after bankruptcy. If, however, he considers that it is worth a great deal, he will try to get as much as he can for it and you will lose the item. But, don't intentionally lowball the prices of any assets that you have, or it may be considered as an attempt to commit fraud.

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