Exempt and Non-Exempt Property
When you file for bankruptcy and the courts grant it to you, your assets are divided into exempt and non-exempt categories.
Exempt categories are those that creditors cannot touch and, thus, you get to keep.
Non-exempt categories are those that can be sold at auction or in other ways in an effort to raise money to pay off the creditors.
Each state has its own rules about what constitutes exempt and non-exempt properties.
For example, in nearly all cases, the primary residence of the homeowner is considered to be exempt and out of the reach of creditors.
Second homes or vacation homes, however, are usually considered non-exempt and can be sold or auctioned off.
If your bankruptcy filing is successful, you will be assigned a bankruptcy trustee.
This person will be in charge of disposing of your non-exempt properties.
He has a particular interest in your non-exempt items because he gets paid on commission.
When items are sold the proceeds are given to the court.
The court then returns the money to the trustee for distribution among the creditors.
In the process he will take out his cut which is usually a decreasing sliding scale based on the dollar amount of the merchandise sold.
In quite a few cases, your paperwork will indicate that you really have no items or property of value.
In this case, the trustee has no interest in trying to sell your stuff because it would just be time wasted on his part.
What this means in practical terms is that unless you have valuable heirlooms among your listed property, you will most likely get to keep the bulk of it because it would cost the trustee more time and money to sell than he would get in return.
These types of cases are usually referred to as no-asset cases, because no assets of value are held by the debtor.
In a no-asset case, don't be surprised if you meet the trustee only once and never hear from him again.
If, however, you have property such as multiple late model cars, which can easily be sold on the open market, you will most likely lose those.
If you think that it is a good idea to attempt to hide assets to prevent them from being sold or auctioned off, it is best to reconsider.
If any evidence of fraud is discovered, not only might your bankruptcy filing be disrupted, you will be guilty of a criminal offense as well and possibly have to face jail time.
Exempt categories are those that creditors cannot touch and, thus, you get to keep.
Non-exempt categories are those that can be sold at auction or in other ways in an effort to raise money to pay off the creditors.
Each state has its own rules about what constitutes exempt and non-exempt properties.
For example, in nearly all cases, the primary residence of the homeowner is considered to be exempt and out of the reach of creditors.
Second homes or vacation homes, however, are usually considered non-exempt and can be sold or auctioned off.
If your bankruptcy filing is successful, you will be assigned a bankruptcy trustee.
This person will be in charge of disposing of your non-exempt properties.
He has a particular interest in your non-exempt items because he gets paid on commission.
When items are sold the proceeds are given to the court.
The court then returns the money to the trustee for distribution among the creditors.
In the process he will take out his cut which is usually a decreasing sliding scale based on the dollar amount of the merchandise sold.
In quite a few cases, your paperwork will indicate that you really have no items or property of value.
In this case, the trustee has no interest in trying to sell your stuff because it would just be time wasted on his part.
What this means in practical terms is that unless you have valuable heirlooms among your listed property, you will most likely get to keep the bulk of it because it would cost the trustee more time and money to sell than he would get in return.
These types of cases are usually referred to as no-asset cases, because no assets of value are held by the debtor.
In a no-asset case, don't be surprised if you meet the trustee only once and never hear from him again.
If, however, you have property such as multiple late model cars, which can easily be sold on the open market, you will most likely lose those.
If you think that it is a good idea to attempt to hide assets to prevent them from being sold or auctioned off, it is best to reconsider.
If any evidence of fraud is discovered, not only might your bankruptcy filing be disrupted, you will be guilty of a criminal offense as well and possibly have to face jail time.
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