Selling exempt car after filing bankruptcy

[georgiamommy]

Hello everyone, let me say this forum is a wonderful informational tool and it has been very helpful! I filed for bankruptcy on 4/7 and my 341 is next week.
My home and car are exempt assets. My car is listed on my bankruptcy as exempt and I had no lien on the car. It's an old car and was standing on it's last leg. It was worth approx $700, if that. I ended up selling the car for $500 but it is listed as exempt on my bankruptcy. Should I disclose to the trustee that I recently sold this car or is that irrelavent since it is exempt?

[LuciluS]

I think it would be in your best interest to let him know. Why? Because the new owner could take the Deed and get license plates which would then be documented you sold the car.

You have now taken an Exempt Asset and turned it into Income. I hope you were under the Median Income for your State as the Trustee may ask for you to Amend your Petition. However, for $500, maybe the Trustee will say it's not worth it.

Luci

[georgiamommy]

Yes, I was about $3,000 under the median income for my state.
I know the person that I sold it to has gotten the registration and title changed over to their name. Should I contact my attorney and let him know before the 341 next week?

[LuciluS]

If I were in your shoes, I would contact the Attorney and let him know. I hope he is planning on attending your 341 meeting and then he would know and might have some way of explaining it to the Trustee that would be advantagous to your Case.

Luci

[fltoo]

There is no problem selling your exempt asset and using the money to live on.

[StartingOver08]

There is no problem selling your exempt asset and using the money to live on.

Exactly! Its yours to sell!

[georgiamommy]

even before my 341 and my discharge?

[HHM]

You cannot (should not) sell it before discharge. Technically it is part of the BK estate and the BK estate exists until discharge. Even if the property is exempt, it is not abandoned by the estate.

Do not sell it until after discharge.

[LuciluS]

You cannot (should not) sell it before discharge. Technically it is part of the BK estate and the BK estate exists until discharge. Even if the property is exempt, it is not abandoned by the estate.

Do not sell it until after discharge.

I knew I was right, but being a Newbie I didn't want to state such. I've researched a lot and knew once you filed Every Material Item becomes property of the Bankruptcy Estate.

GeorgiaMommy...I would contact your Attorney and let him/her know. Remember, Your Attorney Is On Your Side. My thought process is since it was only $500, Trustee may overlook the Sale. I would look at Nada.com, & other used car prices (kellybluebook.com, I think?, etc.) & pray you sold it for at least the minimum value of said vehicle.

Luci

[justbroke]

"Property of the bankruptcy estate" is the key phrase here. Until it is abandoned by the Trustee or you are discharged, is is still, in fact, property of the bankruptcy estate and under the control of the Trustee. While nothing may happen from doing this, it is certainly not advisable. I'll temper HHM's "should not" with "probably shouldn't".

Just let your lawyer know about it, and see what he thinks. You may have trouble with certain questions asked at the 341 Meeting about assets you have disposed of since filing.

[HHM]

Here is the rub. You sold an exempt asset and converted it into a non-exempt asset i.e. cash (assuming your state has no cash or wild card exemption), I wouldn't disclose it unless the trustee asks specifically if you sold anything after the case was filed.

Worse case scenario, the trustee will require you to pay that $500 to the Bankruptcy.

[georgiamommy]

I was thinking the same, if the Trustee does not specifically ask if I have sold the car, why volunteer the information? Do they check and see what automobiles are registered in your name? I'm sure the new owner has transferred title / ownership to their name so nothing is registered in my name.