Search Site
Menu

Is it Possible to Keep Some of Your Nonexempt Property in Chapter 7?

In a Chapter 7 bankruptcy, the appointed trustee collects and sells part of the debtor’s assets and then distributes the proceeds to creditors. However, Chapter 7 debtors are not left entirely destitute. Assets that the debtor is allowed to keep are called exempt property. In addition, a Chapter 7 debtor may be allowed to keep certain nonexempt property.

The trustee might abandon an asset where there would be little or no value to be distributed to creditors if the item were sold. For example, suppose that the debtor has a home gymnasium consisting of some old exercise machines and free weights. A sale of these items would bring in a nominal amount of money. Moreover, gymnasium equipment is heavy and bulky. It would be difficult to transport and store the items in anticipation of a sale. The time, energy and cost to sell the equipment could easily exceed its current market value. Therefore, a trustee would likely abandon the property to the debtor.

A third party might also receive abandoned assets. When a creditor has a secured interest in property, they can often take it from the trustee. Suppose, for example, that the debtor owns two cars. The bankruptcy code allows an exemption for only one vehicle, so the second car is nonexempt and can be seized and sold. Assume that the nonexempt car is worth $4,000 but there is an outstanding car loan of $6,000. Since the car is worth less than the loan amount, there would be no money available for creditors other than the vehicle lender. Therefore, the trustee is likely to abandon the vehicle and turn it over to the lender.

Although the lender could sell the vehicle, that is not the only option. The lender might incur substantial costs and time in selling the vehicle. So the lender may agree to let the debtor keep the vehicle so long as the debtor makes regular loan payments. This would be a mutually beneficial arrangement. The lender gets the full amount of the loan without sales costs. The debtor keeps a desirable vehicle and avoids the cost and inconvenience of finding a replacement car. An experienced bankruptcy attorney may be able to work out other ways for the debtor to retain nonexempt property.

Jeff Field & Associates concentrates its practice on bankruptcy and debt relief in and around Atlanta, Marietta and Athens, Georgia. If you have a personal debt problem, feel free to contact us online or call 404-381-1278 for a consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *

Videos
Our Attorneys
Client Reviews
  • google
    5.0/5.0

    Jeff Field and Associates have been fantastic. From Chris to Casey and also Jeff. Grateful for their guidance during this time!

    Read more

    Susan Tankersley

  • google
    5.0/5.0

    Jeff Fields and Associates are great bankruptcy attorneys.They made the process for me stress free, I would definitely recommend this firm❤️❤️❤️

    Read more

    Catira Smith

  • google
    5.0/5.0

    These guys, especially Laura, put in over and above to help finish my case!

    Read more

    Michelle Cheshire

  • google
    5.0/5.0

    Chris and Laura have been amazing! The process seamless! All of my questions and needs were addressed! I highly recommend this office for your BK needs!

    Read more

    Crystal Jackson

  • google
    5.0/5.0

    This is the best Bankruptcy Lawyers ever They treat you with respect and do not judge you for the mistakes you made.Mr.Sleeper and MS.Brown are the best they answered every question I had and if I couldn't reach them they always responded to my voice...

    Read more

    Mwells

See all reviews
Contact us

Please fill out the form below and one of our attorneys will contact you.

Quick Contact Form