How Do I Value My Property in Bankruptcy?

While it may be hard to assign a value to everything you own, the valuation of your property is very important when filing for bankruptcy. When you file for bankruptcy protection, there are several forms to fill out, including the voluntary petition for individuals filing for bankruptcy, which outline your basic information, your debt, contracts and leases in your name, your income, financial affairs, and expenses. Filing these forms out is relatively straightforward and they are organized under the headings of “schedules”. The Schedule A/B, which outlines all the property you own such as real estate, automobiles, personal items, and household items, is oftentimes the most difficult to fill out because people have a hard time putting a value on these items. This is especially the case if the property is older or wasn’t bought brand-new.

Declaring Property on your Schedule A/B

By listing your personal property in Schedule A/B of the bankruptcy paperwork, you are declaring this property to be included in your “bankruptcy estate”. This will include both real property, such as your home, and personal property, such as your jewelry, furniture, etc. In this form, you will provide the “current value” of each item, which is also commonly referred to as the fair market value.

How to Find Fair Market Value

Obtaining the fair market of value of real property can at first seem confusing, as the county tax assessor, insurance companies, and private appraisers might all value the property differently. Consequently, the best way to obtain the fair market value of your home is to do a market analysis, comparing your home to others that have sold in the area recently and have similar features. A real estate agent or licensed appraiser can conduct a comprehensive market analysis for a reasonable price.

With regard to your personal property, appraisals are often unnecessary unless the property is jewelry, fur, artwork, or a collectible. For your automobiles, it is acceptable to use a trade publication or a comparable sale price for older models. It’s important to not use the trade-in value of your automobile as the fair market value: these valuations are often lower than the actual fair market value and could result in the bankruptcy trustee selling it in order to pay back your creditors. When it comes to your other household goods, you can typically use the comparable sales prices on local trade websites, or at thrift stores or garage sales. If you have trouble finding a fair market value for a specific household good ask your Roseville bankruptcy attorney about the best way to determine a value for the item.

Why Getting the Value Right Counts

The reason that this valuation is so important is that in many cases, bankruptcy can protect your property from being seized and sold by the bankruptcy trustee in an effort to pay back your creditors. Moreover, bankruptcy exemptions can only protect your property up to a certain value. As aforementioned, if the fair market value is higher than expected, you could end up having to surrender property unnecessarily.