When a person files for Chapter 7 bankruptcy, one of the trustee's responsibilities is to liquidate the individual's assets and distribute the proceeds among the creditors. This process can be lengthy and complicated and it is not always easy to determine what will happen to a particular asset.
Will All Assets Be Sold?
Not necessarily. The trustee must determine which assets can and should be distributed to pay off debts. Each state also has certain exemptions for assets that are not eligible for distribution.
Some assets that are eligible for bankruptcy exemption in Missouri include:
- A home (up to $15,000 of equity in the property where someone currently or will live, or up to $5,000 of equity in a mobile home if the person lives there);
- A vehicle (up to $3,000 of equity);
- Up to $3,000 in personal belongings (such as clothing, appliances, and furniture); and,
- A wildcard exemption (up to $600 in value; or if someone is the head of household, up to $1,250 in value and $350 in value for children).
Additional assets can qualify — learn more here.
When trustees abandon property, they are no longer responsible for liquidating or distributing the proceeds from that particular asset. In most cases, the abandoned property will be returned to the debtor. However, there are some instances where the abandoned property may be sold to pay off creditors.
There are several reasons why a trustee may abandon property in Chapter 7 bankruptcy. One of the most common reasons is that the asset is not worth enough money to justify the time and effort required to sell it. In other cases, the trustee may abandon property because selling the asset without incurring a significant loss is impossible. Another reason is that the trustee may leave the property if the debtor requests that they do so.
Considering Filing for Chapter 7 Bankruptcy?
If you are facing bankruptcy, it is essential to understand the process and your rights. An experienced bankruptcy attorney like those at Licata Bankruptcy Firm can help you navigate the process and ensure that your rights are protected. Contact us to schedule a free initial consultation. We can help you understand your options and make the best decision for your unique situation.