When you file bankruptcy, there is an estate created. The estate consists of all the property that you own, of any kind, such as houses, cars, bank accounts, investment accounts, retirement accounts, licenses, patents. . . just about anything you can imagine. A lot of the property in the estate is exempt, meaning that even though it’s in the estate the trustee can’t sell or use it. This includes a portion of the value of your house and car; the full value of your retirement accounts; most of the household furnishings you have; your clothes (except furs and jewelry); and a number of other items specified by law.
It sometimes happens that there are some items that aren’t covered by an exemption. Often these are of such a small value that the trustee isn’t interested. But you’d be surprised at what a trustee might sell. I recently had a case where the trustee sold $325 in firearms. Here’s what happened.
My client owned five guns. Utah law says you can exempt any three of the following: shotgun, handgun, shoulder arm (rifle). My client had one shotgun, two handguns and two rifles. My client got to pick which three she kept, but had to take the other two down to the auctioneer, who put them in an auction and got $200 for the rifle and $125 for the handgun, for a total of $325.00. After deducting the auctioneer’s fee of $63.25 the trustee netted $261.25, which he will distribute to creditors.
We didn’t think the trustee would sell the guns, but I told my client that it was his decision and his alone. Liquidating assets to pay creditors is what trustees do and there are no guidelines for what the trustee can or can’t sell if the item isn’t exempt. So just because you think what you have isn’t worth anything, don’t think the trustee won’t sell it.
If you have bankruptcy questions, call us.