2 computers in chapter 7

[Scarlett1234]

Hi, I wonder if anyone had 2 computers exempted in chapter 7? My research shows normally one computer can be exempted (Federal exemption is the one I am talking about ), has anyone successfully exempted 2 computers? If only one is allowed, what about the tool of the trade? If a person is a programmer, can he claim 2 computers or one of them under the tool of the trade? Thanks.

[flashoflight]

Don't you have access to the wildcard exemption? I also would have a hard time believing that computers don't rapidly depreciate below the $625 per item limit shortly after purchase. You could claim tool of the trade too. Computers are not things that hold value like jewelry and art.

[justbroke]

I am in Florida and we only have the Florida exemptions. My two were exempted using my wildcard and unused homestead exemption. They're just lumped together. Unless you have an Apple MacIntosh, your computer likely depreciated significantly.

[Scarlett1234]

Don't you have access to the wildcard exemption? I also would have a hard time believing that computers don't rapidly depreciate below the $625 per item limit shortly after purchase. You could claim tool of the trade too. Computers are not things that hold value like jewelry and art.

I didn’t quite understand about the wildcard and homestead exemption . From what I read , if the debtor doesn’t own a home , he can use his entire homestead exemption to protect his cash ? If that’s right , then the wildcard can be saved for the computers . If not , he would need the wildcard to protect the money he might have on his hand .
I thought “ one computer “ is a hard and fast rule , everyone only can have one computer. His computer is nothing fancy , a 4 years old laptop . He is thinking about buying another one with cash as a backup for coding ,but I am worried he will lose that in bankruptcy .

[Scarlett1234]

I am in Florida and we only have the Florida exemptions. My two were exempted using my wildcard and unused homestead exemption. They're just lumped together. Unless you have an Apple MacIntosh, your computer likely depreciated significantly.

I didn’t quite understand about the wildcard and homestead exemption (Federal exemption) From what I read , if the debtor doesn’t own a home , he can use his entire homestead exemption to protect his cash ? If that’s right , then the wildcard can be saved for the computers . If not , he would need the wildcard to protect the money he might have on his hand .
I thought “ one computer “ is a hard and fast rule , everyone only can have one computer. His computer is nothing fancy , a 4 years old laptop . He is thinking about buying another one with cash as a backup for coding ,but I am worried he will lose that in bankruptcy .

[justbroke]

Understanding exemptions can be complicated and are a section of bankruptcy law about which I am reticent to provide any real advice. Exemptions can be Federal only, State only, or a combination of the two.

Florida debtors that don't protect a home have $5,000 for personal property or they can chose to use some of that $4,000 to help protect a single vehicle. In most cases, exemptions can be doubled if you are married and filing together.
In Florida, we can't use the Federal exemptions so we rely on the Florida state exemption scheme.

Under the Florida exemption scheme we have only $1,000 for a single car, $1,000 for personal property, and if we don't claim a homestead (or benefit from a homestead) we can use $4,000 from the homestead exemption on any property.

So, as long as you have $$$ left in exemptions to cover personal property, you can exempt any property. But that's not true in every State and under every exemption scheme! In some State exemption schemes you may not be able to protect some or all cash on hand (or in banks)!

In California, there are two exemption schemes known as System 1 and System 2. One favors real property over personal property, while the other favors personal property over real property. Choosing the correct scheme is important. In some States, the debtor can choose the State exemption scheme or the Federal exemption scheme. Care must be taken to analyze the debtor's need and hopefully protecting property under the appropriate law.

Bottom line is that exemptions are precarious and must be considered in light of the individual debtor and what they are trying to protect combined with which exemption scheme to use.

[Scarlett1234]

Understanding exemptions can be complicated and are a section of bankruptcy law about which I am reticent to provide any real advice. Exemptions can be Federal only, State only, or a combination of the two.

Florida debtors that don't protect a home have $5,000 for personal property or they can chose to use some of that $4,000 to help protect a single vehicle. In most cases, exemptions can be doubled if you are married and filing together.
In Florida, we can't use the Federal exemptions so we rely on the Florida state exemption scheme.

Under the Florida exemption scheme we have only $1,000 for a single car, $1,000 for personal property, and if we don't claim a homestead (or benefit from a homestead) we can use $4,000 from the homestead exemption on any property.

So, as long as you have $$$ left in exemptions to cover personal property, you can exempt any property. But that's not true in every State and under every exemption scheme! In some State exemption schemes you may not be able to protect some or all cash on hand (or in banks)!

In California, there are two exemption schemes known as System 1 and System 2. One favors real property over personal property, while the other favors personal property over real property. Choosing the correct scheme is important. In some States, the debtor can choose the State exemption scheme or the Federal exemption scheme. Care must be taken to analyze the debtor's need and hopefully protecting property under the appropriate law.

Bottom line is that exemptions are precarious and must be considered in light of the individual debtor and what they are trying to protect combined with which exemption scheme to use.

Thank you, it does seem complicated, every time when I tried to research more on it, if for some reason, he cants exempt his second computer, what would be options? Would he be offered a chance to pay and buy it back from the trustee at fair market value? Or he will have to pay the full price tag he once paid for the computer to the trustee if he wants to keep it? Is there a possibility the trustee will just take the computer with no option for him to buy it back?

[justbroke]

He would be offered a chance to negotiate with the Trustee on the value and on how much the Trustee wants. The Trustee's usually don't want an old used computer. They may even abandon it (don't want anything to do with it). If they want the value then you can negotiate. For example, if the computer is worth $400, you could start your offer to the Trustee of $200. The Trustees like the negotiation because they don't have to deal with actually selling the item and collecting the money, which will stretch the closing date of a Chapter 7.

The first key is figuring out how much the computer is worth. We use "yard sale" (or fire sale) prices for this type of personal property. So, how much could the debtor get on eBay or at a garage sale? From there, you negotiate with the Trustee.

Since I don't know in which State your friend lives, I can't offer any comment on the exemption scheme for that State. Most States that allow the federal exemptions also allow the debtor to choose between the Federal and State exemption scheme. You must always look to which scheme gives you the better protection for personal property. This is why people with significant property hire an attorney to represent them in a bankruptcy.

[Scarlett1234]

He would be offered a chance to negotiate with the Trustee on the value and on how much the Trustee wants. The Trustee's usually don't want an old used computer. They may even abandon it (don't want anything to do with it). If they want the value then you can negotiate. For example, if the computer is worth $400, you could start your offer to the Trustee of $200. The Trustees like the negotiation because they don't have to deal with actually selling the item and collecting the money, which will stretch the closing date of a Chapter 7.

The first key is figuring out how much the computer is worth. We use "yard sale" (or fire sale) prices for this type of personal property. So, how much could the debtor get on eBay or at a garage sale? From there, you negotiate with the Trustee.

Since I don't know in which State your friend lives, I can't offer any comment on the exemption scheme for that State. Most States that allow the federal exemptions also allow the debtor to choose between the Federal and State exemption scheme. You must always look to which scheme gives you the better protection for personal property. This is why people with significant property hire an attorney to represent them in a bankruptcy.

Thanks again . I am in WA. The federal exemption seems better if he wants to protect some cash , I was reading this from federal exemption , it doesnt really say one computer only ,Would you say as long as computer is under 625 each and total value is less than 13400, 2 computers can be exempted theoretically speaking ?

• $625 per individual item with a $13,400 aggregate value,on household goods, furnishings, appliances, clothes, books, animals, crops, musical instruments. (11 U.S.C. § 522(d)(3).)

[justbroke]

As far as I understand, the federal exemption scheme does not say "one computer" or "one musical instrument" but the up to $625 value of any of the household goods.

I don't know where someone read that it was only "one" computer. Now Massachusetts list "one computer" under the Massachusetts State exemption scheme. But Mass also allows the use of the Federal exemption scheme.

This is why one must look to their State-specific exemption scheme or schemes and apply the one which will benefit them the most.

[Scarlett1234]

As far as I understand, the federal exemption scheme does not say "one computer" or "one musical instrument" but the up to $625 value of any of the household goods.

I don't know where someone read that it was only "one" computer. Now Massachusetts list "one computer" under the Massachusetts State exemption scheme. But Mass also allows the use of the Federal exemption scheme.

This is why one must look to their State-specific exemption scheme or schemes and apply the one which will benefit them the most.

I understand . He doesnt have 2 computers currently ,but the 4 years old one is running very slow , he is thinking about buying another one with cash and keep both ,if he was to file bankruptcy 6-9 months later , would this purchase raise red flag ? I dont know if it would be perceived as he doesnt have money to pay off debt but he has money to buy computer .

[justbroke]

No, such a purchase doesn't raise any flags at all.

[Scarlett1234]

No, such a purchase doesn't raise any flags at all.

Cant say enough thank you , hope you have a good weekend.

[Scarlett1234]

No, such a purchase doesn't raise any flags at all.

I forgot to ask one more thing, for the cap of each item, if an item's fair market value is over 625, and if the wildcard is used on the item, the wild card only needs to cover "the item fair market value"-625, right?

[justbroke]

I forgot to ask one more thing, for the cap of each item, if an item's fair market value is over 625, and if the wildcard is used on the item, the wild card only needs to cover "the item fair market value"-625, right?

That is how I read the exemption. However, and this may depend on your specific District, most people use yard-sale or garage-sale pricing and not fair market value when it comes to personal property (other than vehicles). I used eBay for some things and guessed what I could get at a yard-sale for others.

The only computers that I know that keep a good portion of their value after 1, 2, 3 and seen 4 years are the Apple computer products. I have always sold my old iMacs for 50% of what I purchased them for... even after 4 years! (Sold an 2012 iMac for $800 in 2017. Unheard of when it usually comes to computers.) A late 2015 iMac is selling for about $800-900 on eBay today.

Most computers, and especially laptops, may be worth $100 after a year so long as they are not Apple products.