Trustee asking about tools

[jenbow]

Hello all..

At our 341 the trustee asked about our tools of the trade. He wanted to know how we could claim our tools with the tools of the trade exemption if we claimed these as on our 2008 taxes under depreciation. The amount we claimed was $3,277.

My question is if we have to pay the trustee this amount, can we offer a cash settlement for less?

Also, if we have to pay the trustee how long do we have to pay him?

Thanks all

Jen

[btbeme]

The general rule of thumb is that items are worth what they are worth today, not in 2008. Are these tools which are worth less now, or tools that would retain their value? For instance, a hammer is worth about the same amount year after year since it generally does not get "used up", but a generator definitely depreciates as it gets used...

The Trustee has a valid question that your attorney should answer. As for the amount, well, there is a definite cost in time and effort for a Trustee to claim, inventory, list, and sell the tools, so you would have a few choices. First would be a cash offer - let your attorney help you make this decision and for how much. How long to pay would be up to the Trustee, but I have heard that they are very reasonable (this would delay your discharge and closing for that length of time though). Second would be to surrender them to the Trustee and buy them back (or not) at auction some time later down the road, probably for a lot less than they are worth. Third would be to have your attorney attempt to drive home the point that, while a deduction was taken (two years before you filed for BK), the effort being undertaken to get something out of this isn't worth the time or money to the Trustee.

None of this will affect your eventual discharge, but having an assets case (rather than a no-assets case) can prolong the process before the case is discharged and closed. But the 60 day mark after your 341 hearing is still The Big Day - once past that, it is smooth sailing.

If this is the only hiccup, you are doing just fine. Self-employed filers will always have more potholes in the road than most people, simply because of the nature of being self-employed. This may cost you a few dollars, but I wouldn't lose sleep over it.

[frogger]

That's why the trustees love tax returns. They can be a gold mine of information as to any assets that you may have.

Figure up garage sale / pawn shop prices and have your attorney make them an offer. The trustees are normally looking for a quick and easy way to get the money. They don't want to sell them unless you give them no choice.

Give them that choice.