Exemptions

[Geeznowwhat]

This is just a general question. I am curious about the process

Say you have a car the is really worth $4k. Your exemption is enough to cover it.

Next, say the trustee decides that the NADA fair retail value is $5k. Ok..so, he takes the car and can only get $4k for it.

Does he then have to return it to you? How do you get your car back when it is clear it will not sell for what the trustee thought?

Next...say the trustee can get $4,300 for it. Can you then amend the exemption page to include all of the exemptions you could have taken to cover the extra 300 and then get your car back?

It is better to declare the value at $7000 and use more of the wild care to cover it... even though you know there is just no way it ever would sell for that much) just to avoid the entire scenario above?

I guess I am trying to figure out how this works. If the trustee decides to take something and it turns out it can't be sold for more than the exemption.

[LadyInTheRed]

If the trustee sells the car for $4,000, he would pay the expenses of sale and then turn over the proceeds to you. If he thought it was worth $5,000, he'd probably try to sell the non exempt portion to you for $1,000.

NADA retail value is easy to determine. If you use NADA value and are able to exempt that value, then the trustee is not likely to try to sell the car. If you have extra exemption available, you can apply it to the car. But, be careful not to waste your exemption. What if the trustee disagrees with a value of a different asset and you need that exemption?

[LadyInTheRed]

I should also add that if you completely exempt an asset and the trustee thinks the asset is worth more than the value you reported, he has to object to the exemption and the value would be determined either by negotiation between you and the trustee or by the judge after you both present evidence to support your valuation. The trustee can't just take assets that you claim are 100% exempt and try to sell them.

[Geeznowwhat]

Really...the trustee can sell it for less than the exception and then take a fee from the top? That is just stealing from the petitioner!!

If he cannot actually sell it for more than the exemption...he can still just take it and get a fee too? How is that legal?
What ever keeps the trustee from doing this with every car? Every asset? What keeps the trustee from declaring the value quite high and then forcing the petitioner to find cash to pay him? This just does not sound like justice. If it is exempt....then the trustee should never be allowed to actually consummate any sale for money less than the exemption.

[Geeznowwhat]

Oh...if he has to go to court...that means so does the BK person. Leaving the petitioner hunting for money to pay lawyers? Pro se is then at an even more sever disadvantage in this coming process. Most of us went this way because we cannot afford any money for a lawyer. Seeking free resources and trying to learn everything ourselves.

Doesn't the trustee have to prove he can really sell it for that much? For example....I have an old heirloom ring with a diamond. I set its value at $2k. However...not one single pawn shop will actually offer me anything for it. They do not want it. Maybe after months on eBay it might find a buyer who wants this "old English" cut stone. Doesn't the trustee have to prove he can sell it for more than $2k to a judge? I couldn't prove it is worth even the $2k I put on it since I cannot find anyone willing to write an offer.

[justbroke]

Geeznowwhat please reread what LadyInTheRed wrote. If the Trustee objects to your exemption, then there will be a hearing. The Trustee will have the burden to prove that the exemption is wrong and/or that the valuation is wrong. You can both present evidence to support your claim. Trustees rarely get market value for things and you are to use market value (not liquidation value). If the Trustee wins the Objection, then you can negotiate with the Trustee to purchase the difference between the "adjudged" value and your allowed exemption.

The Trustee doesn't just come and take your property.

I would stop worrying about this unless and until a Trustee actually objects to your claim of exemption. There is no need to worry as 95% of the time, the Trustees pretty much know what the hassle and value of property (they have guidebooks and half-way decent staff that do this for a living).

Remember, the Trustee doesn't prove that they can sell it for the market value. The Trustee only needs to prove market value through admissible evidence. The same thing goes for you.

Again, stop worrying unless and until you have an objection. Then you can worry about "how" you counter the Trustees assertions.

[Geeznowwhat]

Still does not answer my question. If the trustee somehow "proves" the market value is $5k. Takes it. Then cannot get more than $2k for it.
Since I had it exempt for $2k ... Doesn't that mean I get it back? Isn't it basically just a form of theft to take it claiming it has a value that is proven wrong..but still sell it out from under me? I can easily get an appraisal for one diamond ring for $9k....but...never be able to sell it for much of anything.

In the case of jewelry...a book that lists market value isn't really going to do much. And an appraisal still means nothing if you cannot sell it for even a fraction of that. Anyway...if the trustee takes it based on. Market value..and cannot sell it for more than the exemption...that means I still lose it...trustee gets to sell it, take a fee, and I lose the ring even though I had it exempt at that price....right?

It's not a matter of worrying about it....I am just trying to get it all straight in my understanding.

[justbroke]

Still does not answer my question. If the trustee somehow "proves" the market value is $5k. Takes it. Then cannot get more than $2k for it.
Since I had it exempt for $2k ... Doesn't that mean I get it back? Isn't it basically just a form of theft to take it claiming it has a value that is proven wrong..but still sell it out from under me? I can easily get an appraisal for one diamond ring for $9k....but...never be able to sell it for much of anything.

I did answer the question so perhaps you don't understand the process. If the trustee shows, through evidence, that the value is $5K, then the Trustee sells it. If the Trustee only gets $2K for it, then the Trustee applies the costs to liquidate and then gives you all of your exemption unless the sale prices less the fees to sell it are not enough; in which case you'd receive the balance after costs. If you can't prove otherwise, then you either negotiate with the Trustee to pay for the difference, or you challenge it by going to the hearing and introducing admissible evidence and/or testimony establishing a different value.

In the case of jewelry...a book that lists market value isn't really going to do much. And an appraisal still means nothing if you cannot sell it for even a fraction of that. Anyway...if the trustee takes it based on. Market value..and cannot sell it for more than the exemption...that means I still lose it...trustee gets to sell it, take a fee, and I lose the ring even though I had it exempt at that price....right?

Welcome to the game.

The reason I say don't worry unless and until there is an objection to claim of exemption, is precisely because there is no sense speculating what a Trustee may "think" the true value. Some Trustees will send it to auction and will tell you, quite pointedly, that you are welcome to go to the Auction and bid on the item. (At least there were some Trustee in Florida districts that did this during an uncertain period when the $4K wildcard was in question when there was a homestead.) How you deal with valuation, exemptions, objections and the negotiations with the Trustee is sometimes an art and very fact specific. There is no way anyone can prep you on how to deal with an issue which has not arisen because these are all so fact specific.

Attorneys who deal in this area are usually very good negotiators. They have an idea of what it "costs" to for the Trustee to sell something, and understand what "fire sale" prices are relative to market value. These practitioners are able to fashion a negotiated value based on the Trustee wasting his/her time to sell something which makes the Trustee absolutely no money. (Trustee makes no money unless it's above the exemption value.) The super-majority of Trustees don't want to waste their time, but know that negotiation may allow them to get "quick" cash for the creditors while they make a small commission.

Bottom line, market value is always what a reasonable purchaser is willing to pay at a given time for property. You truly don't know true market value until you actually place it on the market. Everything else is just based on training, experience and knowledge to come up with some sort of appraisal of expected value.

Well, that's my mini course on Introduction to the Art of Negotiation.

(Noting that I have successfully negotiated 5 bankruptcy-related hearings in my favor. I calculated, meticulously, the "cost" of proceeding and fighting and offered my adversaries a "cheaper" way out... while maximizing my settlement amount. That's not the experience of an experienced attorney who does this daily and understands your particular Trustee. I have also had no issues with valuation with my Trustees as I took conservative values and didn't try to undervalue anything intentionally to hide equity. All are factors... in a fact specific case.)

[Geeznowwhat]

This is going to be interesting. I have no room to negotiate. I am totally broke. If I have to find the filing fee...I could not.
I have no income....and can make no deal to pay anyone anything.

This will be interesting