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This question can be challenging, as there is no standard for asset valuation. It’s best to simply make a list of your assets and assign values to them like you would if you were having a garage sale. Of course, the aim is to be realistic, but there is no standard for valuation that is generally accepted.
For instance, you may value an antique dresser at a high amount, but it could be worth significantly less, depending on its condition. Asset analysis, in many cases, comes down to your best guess. An honest and full disclosure is crucial.
However, certain assets do operate on a standard of value, such as the Kelley Blue Book value of a car or market analysis on a home. Assets such as bank accounts also have actual values that need to be communicated to your attorney entirely.
Even items in your home, such as paintings that you have listed for sale, can turn into bankruptcy crimes if not fully disclosed. It is important to communicate thoroughly and entirely when disclosing your assets.
Fair market value, as a bankruptcy term, essentially means the value you would receive if you sold an asset. Insurance companies tend to overvalue assets, such as valuing a wedding ring at $1,000 when, in reality, the ring is only worth $500. Fair market value does not refer to the price you insure an asset for but rather the price that you would receive if you sold it today.
Fair market value for a car can be found in how much money you would receive if you sold your car to a third party rather than trading in to a dealer. With personal items in your home, we use the garage sale pricing system in an attempt to find actual fair market values for all of your assets.
Attorney Penny Bach is a seasoned lawyer based in Cook County, Illinois, who has helped countless clients just like you navigate the intricacies of asset management. With over 20 years of experience, she is prepared to assist you in securing your financial future so that you can focus on providing for yourself and your family.
Still have questions? Ready to get started? Contact Bach Law Offices, Inc today to schedule an initial consultation.
This situation would only ever come up if you were in a Chapter 7 or Chapter 13 bankruptcy and the trustee is either trying to sell your assets or asking you to pay more money into your case after finding out your assets are worth more than we initially stated.
For instance, if you listed your car’s worth at $9,000 and the trustee values your vehicle at $15,000, they can file a motion to seize your car. From there, they will sell your car and use the proceeds to pay creditors.
If you believe that the trustee’s valuation is wrong, you can contest the motion. Sometimes, the trustee is right on paper but can be wrong due to damages to the vehicle, which change the value. The trustee might also accidentally misvalue the car by mistaking the year, make, or model. In these cases, you can politely inform the trustee and the court that you believe they are incorrect.
You can also contest a motion during Chapter 7 bankruptcy when a trustee is selling your real estate for significantly less than you know it’s worth. However, you can only fight the trustee’s sale if you have a better offer on the home that is approved by the court.
In Chapter 13 bankruptcy, instead of trying to sell your assets, the value of your assets is examined to determine how much you will be required to pay over the 36–60-month period of your case. If you argue that your assets are worth more than what they are being valued for, you may have to pay more.
This can either involve a simple negotiation with the court or can lead to a motion in front of the court where you prove that the trustee’s valuation is wrong with documentation and witness testimonies.
Absolutely not; bankruptcy is about full disclosure, and it’s always best to be safe rather than sorry. Even though statutes require assets over $600 to be listed, you should simply list every asset you own in case an asset is worth more than you initially thought.
It would be better to have the trustee reject assets under $600 than to fail to report them altogether. I’ve even had clients list costume jewelry for fair market value as part of the process of disclosing all assets.
There are several ways to protect different types of assets, but assets will be at risk for meaningful distribution if they are worth too much. In other words, a Chapter 7 trustee will liquidate your assets if their value can lead to a meaningful distribution to creditors.
When it comes to your car, for instance, a trustee is a lot more likely to sell your car if it is valued at $5,000 than $500. This is because $500 may not be seen as a significant distribution, meaning that the value of the car would not be enough to distribute and pay your creditors significantly.
It would be best to confer with your lawyer to decide whether Chapter 7 or Chapter 13 would benefit you most when you are looking to protect assets. Keep in mind, however, that you will pay the dollar amount for any assets you retain to your creditors over a period of three to five years.
For more information on How Are Assets Valued In Bankruptcy, you may benefit from an initial consultation with Bach Law Offices, Inc. Get the information and legal answers you are seeking by calling (847) 440-5998 today.
Attorney Penny Bach is a seasoned lawyer based in Cook County, Illinois, who has helped countless clients just like you navigate the intricacies of asset management. With over 20 years of experience, she is prepared to assist you in securing your financial future so that you can focus on providing for yourself and your family.
Still have questions? Ready to get started? Contact Bach Law Offices, Inc today to schedule an initial consultation.
