Choosing the Right Exemptions in a Bankruptcy Filing
When you file for bankruptcy the court appoints you a trustee to oversee your case. Chapter 7 trustees are paid a small sum of $60 for administering your bankruptcy filing case. The way a trustee makes real money, is trying to find and sell assets. The number one asset the trustee is looking for is cash. When looking into the statutory formula, in addition to the $60 per bankruptcy case, trustees are paid a commission from creditors to distribute liquidated assets that are recovered. The bank trustees like to see is cash. The reason being is this asset does not need to be liquidated and easily dispersed. There is no property to pick up and auction, no realtor needed, and no storage of any property is necessary. This should be important to you because if you are filing bankruptcy, you get to claim exemptions and property of various types. These exemptions allow you to keep this certain property. As you choose your exemptions, always remember to apply those exemptions to the cash you have first. Examples of cash could include your bank accounts, tax refunds, etc. The reason being is the trustee always weighs out whether it’s worth selling other types of property. Sometimes the hassle and the cost of selling something makes it not worth for the trustee to pursue that asset. An example of this would be, say you had an old car that ran well it was in good shape. To you this car is worth about $2000, but if you had to auction it it would probably be worth about $500. This means the Bankruptcy trustee most likely would not want to waste the time to collect this asset for such a small amount of return for the time it would take to collect.
