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What assets and property does a trustee look for in a Chapter 7 bankruptcy?
Question:
What kind of assets or property is the trustee likely to look for in a typical chapter 7 bankruptcy case?
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You will be assigned a trustee in Chapter 7 bankruptcy who, among other things, is in charge of selling nonexempt property to pay your unsecured creditors.
The trustee will look for assets that can be sold easily and for a lot of money. Common examples are cars and houses. However, you must have positive equity in the property, meaning that the value is more than the loan amount. And that equity must not be protected by an exemption. (To learn more about exemptions and how they work, see Bankruptcy Exemptions.)
In most Chapter 7 bankruptcy cases, the debtor does not have a lot of equity in nonexempt property, which means it's not worth the trustee's trouble to sell it. If that's the case, the trustee will "abandon" all of the property in the bankruptcy estate, meaning the debtor gets to keep it.
It's not hard for the trustee to determine which of your belongings to seize and sell because you are required to provide a detailed list of your assets in your bankruptcy papers. Hiding assets is illegal and can get your bankruptcy case dismissed. It is also considered bankruptcy fraud, and it is usually discovered. If the trustee suspects that you are hiding valuable items, the trustee may look outside your list of assets for property that should be in your bankruptcy estate.