How to Value Assets in a Bankruptcy Case

The assets are typically valued at garage sale prices when we’re talking about personal property.  Houses and cars can be readily looked up online.  But when we come to furniture and electronic equipment, collections of stamp, coin, baseball cards, dolls, anything of that nature, you are most likely going to be asked to give a value of what you expect to receive in a garage sale.  It is possible for certain things such as the collections—stamps, coins, baseball cards, and dolls—that you can look it up on eBay and get an idea as to what is being asked on the market.

The Bankruptcy Court Needs to Know Value

This is for the purposes of giving the bankruptcy court and idea as to what you own so that the trustee in a Chapter 7 case can liquidate or Chapter 13 trustee can value it for the purposes of determining how much unsecured creditors are going to receive.  In the case of jewelry where you don’t know how much something is worth, you may have to go to a jeweler to have him appraise it.  So it just depends, but be prepared to disclose all your items and to give your best estimate as to what you think something is worth.

Amount of Debts

In a Chapter 7 the amount of debt that you have is irrelevant.  The Chapter 13, it matters when you start getting to the outer limits of what makes you eligible for a Chapter 13, but that’s not something that most Chapter 13 debtors face.  In a Chapter 13, you are able to pay less than 100 cents on the dollar to unsecure creditors provided certain factors exist.  That is why the asset evaluation is so important because in a Chapter 13, creditors must receive at least as much as they would get if the debtor had filed a Chapter 7.  So if you take for example a house that has $50,000 with of equity and if it were sold in a Chapter 7, the trustee would realize $50,000 worth of equity.  In a Chapter 13, it means that those unsecured creditors would have to get at least $50,000 on their claims.

Property Distribution to Creditors

Now creditors are paid in pro rata fashion which means that they get the percentage of the assets that represents the percentage of debt that the debtor is trying to discharge.  So if somebody has 20 percent of the overall debt, he’s going to receive 20 cents on the dollar of what he’s paid or to be paid in Chapter 7.  In a Chapter 13, they can average that out and allow all creditors to receive X, meaning the same amount of their debt.  Obviously, some creditors will receive less and others will receive more, but it does try to equal out what unsecured creditors are going to receive.  But that’s the point of valuing the assets to the best of your ability.

See also, Homewood Bankruptcy Attorney or call (847) 520-8100.