How Are Assets Valued in Personal Bankruptcy?
In Chapter 7 and Chapter 13 bankruptcy, filers must list and value the assets they own. In Chapter 7, the court may take non-protected assets and sell them to pay creditors. In Chapter 13, a filer can keep non-protected property but must pay unsecured creditors an amount that is at least equal to the value of the non-protected assets.
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Property
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In bankruptcy, all property a filer owns or is entitled to receive is part of the bankruptcy estate, regardless of whether the filer has possession of the property.
Exempt Property
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Exempt property is not part of the bankruptcy estate. State laws determine exempt property. Usually, a certain amount of equity in a car or house is exempt, and some property is exempt regardless of its value.
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Nonexempt Property
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A bankruptcy trustee can take nonexempt property and sell it to pay creditors in a Chapter 7 bankruptcy. Nonexempt property includes cash, artwork and unprotected equity in a home or car.
Valuation
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Assets are valued at the replacement cost. This does not mean that the value is what you can sell the asset for. Instead, the value is assessed by determining how much it would cost to replace the asset.
List
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Filers should make a list of property they own. An inventory list will help you determine which property is exempt.
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