Keeping Non-Exempt Assets in Chapter 7
When you file Chapter 7 bankruptcy, certain types of unsecured debt, such as credit card debt and medical debt are discharged (wiped out). You are also granted bankruptcy exemptions, which protect certain assets from entering into the "bankruptcy estate". Items in your bankruptcy estate are known as non-exempt and will be sold off by the bankruptcy trustee who will pool that money together and make payments to each of your creditors. There are some situations where you may be able to keep the nonexempt property.
Once your Chapter 7 bankruptcy is confirmed, the bankruptcy trustee will review your bankruptcy petition, identify any non-protected assets and collect and sell them. The proceeds from selling non-protected property are divided up among creditors while also charging a nominal fee for the trouble. Trustees are paid by commission according to how much they sell. Bankruptcy trustees will usually enlist the assistance of an auctioneer or broker to sell off assets. They may also publish a public notice about an item for sale, to be sold to the highest bidder.
Keeping Nonexempt Property
In some instances, if a non-exempt asset has a relatively low value or is difficult to sell the trustee may abandon selling it, allowing you to keep it. While you shouldn't ever expect to keep the non-exempt property if it isn't worth the bankruptcy trustee's time and effort to liquidate the property you may actually be able to keep the non-exempt asset. In addition, you may be able to bid for your own non-exempt property. If the trustee accepts your offer, you could find yourself keeping your assets after all.
Contact a California Bankruptcy Attorney
As previously stated, an experienced Citrus Heights bankruptcy attorney will be of invaluable in helping to make sure that you protect as much property as you can use in your state's exemptions. Additionally, by enlisting the help of a bankruptcy lawyer, you'll gain insight into how the bankruptcy court and bankruptcy trustees operate in your jurisdiction, which can vary from state to state and district to district.