Merrionette Park bankruptcy attorney explains that some property may be taken in a bankruptcy case. Particularly, property can be taken by a Chapter 7 bankruptcy trustee if the trustee exceeds the exemption amount and if it’s reasonable to expect that after administration of that asset, there would be something available for creditors. Now, a Chapter 7 trustee must go into court and get approval of the bankruptcy judge before he or she can administer an asset. The debtor and/or the bankruptcy lawyer would have an opportunity to object to that administration of the asset at that time, however you don’t want to get into a situation where you are arguing in front of the judge as to whether or not a particular piece of property can be taken or not. You want to make sure that when you filed bankruptcy, that your property is protected.
Now, there’s no way 100% to protect against a trustee trying to seek an interest in the property, however, you can make reasonably sure that the value of the property is such that the trustee will back down and not try to administer the asset once the actual value is determined by the trustee. If you have an asset that is definitely going to be taken by a trustee, you want to sign an Asset Acknowledgment form with your Chicago bankruptcy lawyer indicating that you are aware that there is an asset that is going to be taken and administered for the benefit of creditors in exchange for you getting a fresh start. Let me give you an example of such a case. I had a client who had a cigarette boat that was worth approximately $17,000. That individual did not have the ability to sell the boat or could not find a buyer for the boat prior to filing and was not using the boat. That individual debtor was willing to surrender that asset even though it had a value of $17,000 that I could not protect in exchange for getting a fresh start. And that’s exactly what happened. The individual debtor gave up his interest in the boat. The trustee took it and sold it and paid creditors a pro rata share. But the debtor walked away from thousands, maybe hundreds of thousands of dollars worth of debt in exchange for the fresh start. That is what is known as the Chapter 7 liquidation case when you file bankruptcy.