best time to liquidate exempt assets?

[IOIOIO]

I expect that at some point I will have to sell possessions on ebay to live off the proceeds. These all total up to less than the exemption amount for a chapter 7 in CA, which is something like 18k, but I was wondering what's the best strategy. If I liquidate them now, I can still exempt the equivalent cash proceeds and live off the cash once my inevitable bk rolls around. Or I can liquidate them gradually once I've filed ch7, but I'm now wondering if that might make things more complicated by indicating income instead of converted assets that are exempt before and after conversion. If I liquidate them before I file, does it matter how much before? Even if I sold this stuff all at once it wouldn't put me over the median income.

What factors should I consider here? My main concern is somehow inadvertently giving a misleading impression (to a trustee, or whoever else I should worry about) as to my ability to generate income, as I can only sell things once. If I sell things on ebay before judgements are obtained against me, then it's even less likely that the proceeds will pass through somewhere than can be seized. The stuff I intend to sell, like musical instruments, won't appreciate or depreciate significantly for the foreseeable future. Selling immediately would be more convenient. This stuff will fetch its highest price at certain times of the year, so if there are no other concerns, I might want to wait until then. etc., etc.

[HHM]

Actually, this is an easy question to answer.

Whatever you do, DO NOT liquidate before filing BK, the cash from the liquidation would not be exempt. However, you can liquidate after you FILE for Bk. In a chapter 7, the trustee only has right to non-exempt assets and income that existed BEFORE the date of filing your BK. Thus, you can sell any exempt asset you want after you file for Bk.

[IOIOIO]

I thought cash is exempt the same as goods, up to the exemption limit?

Also, if I sold stuff (I haven't yet), how long would I have to wait until I file in order to not cause myself a complication?

[HHM]

I thought cash is exempt the same as goods, up to the exemption limit?

Nope, this is called transmutation, once you transmute an asset from an exempt asset to an asset that has no obvious exemption (like cash), you lose the exemption. You may be thinking about the home equity exemption, where, in most states, if you intend the exempt equity from the sale of your residence to be used for a another house, the exemption can be maintained, but that principal does not hold true for personal property.

Also, if I sold stuff (I haven't yet), how long would I have to wait until I file in order to not cause myself a complication?

It really depends on how much money you get. If we are talking about significant sums, then you are in the realm of fraudulent transfer and they can go back one, sometimes two years.

However, if the assets are exempt, why not just file BK as soon as possible. You can do anything you want with exempt assets after you file BK.

[IOIOIO]

However, if the assets are exempt, why not just file BK as soon as possible. You can do anything you want with exempt assets after you file BK.

Thanks for the info. Filing sooner rather than later is exactly what I'm thinking about. The only reason not to file sooner is the desire to keep my head buried in the sand that much longer--as I said in my very first post at http://www.bankruptcyforum.com/showthread.php?t=9335. I can do that since I'm judgement proof.

[CindyLou]

If you are just selling odds and ends or personal belonging, no one will know the difference. Keep the money out of your checking account. Accept money orders only. I'm not saying hide the sale of an expensive asset, but if you are selling a few things here and there don't worry about it. Remember, the your belongings are only worth GARAGE sale value when it comes to bk. most of the cases file in my area only listed 2-5K worth of personal belonings. Personally, mine were only listed as 3000 and we have pretty nice things. But the value is what you can get if you put up a sign in your yard on a saturday morning. Why sell your belongings on ebay? If they are necesseties then you will need them again. Save your stuff and find another way to make a few extra bucks.

[Spartan]

I hope I don't come across as pimping for the Chinese restaurants, but you can make a nice chunk of change delivering food for them. Most of them have delivery service, and they all seem to need drivers who know the area well. They prefer to pay cash and the tips can be nice too. In other words, it is the underground economy in plain view. I don't advocate violating the law of the land. But if you need to survival and this is not victimizing anyone. Sometimes, you have to choose the lesser of the 2 evils.