Laurie A. Knight, Attorney At Law Classic Solutions | Life-Long Results

What Are Non-Exempt Assets?

When you file for bankruptcy, the assets that are not covered by an exemption will be used to pay creditors. A trustee will be appointed to liquidate your non-exempt assets and the value of those assets is then used to pay off your creditors. Some common examples of non-exempt assets include:

  • Bank Account Funds
  • Cash
  • Clothing
  • Second Vehicles
  • Stocks & Bonds
  • Vacation Homes
  • Valuable Items

It’s also possible to negotiate with your creditors to keep non-exempt assets. You can offer the creditor cash value equal to the asset, or you can offer them an exempt item that is of equal value.

Liquidation of Non-Exempt Assets

Chapter 7 is a liquidation of non-exempt assets of the bankruptcy estate. In a Chapter 7 bankruptcy, the trustee will take over the non-exempt assets of the debtor’s estate, sell them for cash, and distribute the money to the creditors.

Usually, the bankruptcy estate has no assets to liquidate and distribute to creditors. The unsecured creditors will receive a distribution from the bankruptcy estate only if there are assets and the creditor files a proof of claim with the Bankruptcy Court.

Laurie A. Knight, Attorney at Law, LLC is here to help you with the liquidation of non-exempt assets during the bankruptcy process. Laurie is a skilled bankruptcy attorney in Chesterfield with extensive experience handling complex bankruptcy cases.

Call Laurie A. Knight, Attorney at Law, LLC at (636) 200-5533 or complete this online contact form to get started.

The Means Test

Under a Chapter 7, the debtor must qualify for relief. To qualify, the debtor must pass the “means test.” The means test is a measure of gross median income for the debtor’s family. Median income is dependent on the number of household members.

When the debtor files a petition with the Court, he or she also files a schedule of exempt property. This allows the debtor to protect certain pieces of property from the claims of his/her creditors. In Missouri, the debtor uses state law to exempt property.

Preparing for the 341 Meeting

When the debtor appears at the 341 meeting, it is important for them to cooperate with the trustee. The trustee will ask the debtor questions under oath.

You may be asked if you:

  • Have you ever filed bankruptcy
  • Listed all your property
  • Listed all your debts

Before the meeting, the trustee will review the debtor’s case. If the trustee has questions about certain pieces of property, he or she will ask for information regarding the property. For example, a trustee may want more information about the debtor’s car to determine the fair market value of the car. If the trustee determines that a piece of property should be liquidated, the trustee will arrange with the debtor the surrender of the property. If the trustee determines that no property is available for liquidation, he/she will file a report with the Bankruptcy Court that says he or she is abandoning all interests in the debtor’s property.

Secured Creditors

Secured creditors may retain some rights to seize property that is securing a debt. An example of a secured creditor is the mortgage company that has a deed of trust for the debtor’s home. A debtor may want to keep certain secured pieces of property and may decide to reaffirm the debt. A reaffirmation agreement is an agreement between the debtor and the secured creditor that states the debtor will remain liable for the debt and will pay the debt, even though the debt would otherwise be discharged in the bankruptcy. The creditor agrees to not repossess/foreclose the property as long as the debtor continues to pay the debt. The Bankruptcy Court must approve the reaffirmation agreement unless the debtor is represented by an attorney during the negotiations of the agreement.

Debt Discharge

A debtor receives a discharge for most of his/her debts in a Chapter 7 bankruptcy. Once a discharge is granted, a creditor can no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. The debtor receives a fresh start and can begin to build a better financial future for themselves and their family.

Get in touch with Laurie A. Knight, Attorney at Law, LLC to schedule a confidential consultation. Call (636) 200-5533 today.

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