Abandoned Property in Chapter 7

: Chris Lee Law Firm

  Filed under: Chapter 7

chapter 7 propertyAs a part of the Chapter 7 liquidation proceedings, the appointed bankruptcy trustee takes inventory of all your assets and determines their value. Any assets not protected by an exemption are subject to sale or auction in order to raise funds to help pay off your outstanding debts. In some cases, the trustee will abandon property if it cannot be used to help pay for debts, or for other reasons.

Abandoned Property

The trustee abandons property in Dallas Chapter 7 if it is determined that the property will not be useful in repaying your debts. This generally happens when the property in question, after the fees owed to the trustee and the taxes on the sale are factored in, will not have a significant impact on the amount owed or be able to repay the creditors.

Often this happens with property such as a home or car, which may have a partial exemption that ends up covering the majority of the value of the property. If you have a home worth $104,000, and you are able to claim $100,000 as a homeowner’s exemption, the trustee will not be likely to sell the home to recoup the $3,000 that is non-exempt. After his fees, the listing fees, brokering fees, and all other related costs of selling the home, there would be nothing of the $3,000 to pay the creditors, so the trustee will abandon the property. When this happens the property reverts to you, if you are the owner, or to the creditor if you owe more than the value of the property to the creditor.

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