Settling an Objection to the Value of an Exemption In Bankruptcy

An objection to exemptions occurs during the bankruptcy process when a creditor does not believe that the exemptions claimed by the borrower are accurate. If you are filing bankruptcy, it is critical to outline all of your debts and assets clearly on your documentation. In order to do this, you will need to estimate the value of each of your assets. It is not common for a creditor to come forward and to issue an objection to the case, but when this happens, individuals need to know how to handle the situation.

Handling an Objection to Exemptions

If you are faced with an objection to exemptions, the creditor will need to report this to the bankruptcy court within the allowed amount of time. You then have several weeks, in most courts, to correct the problem. However, when the creditor files an objection to the value of an exemption, you will need to show how you came to the valuation that you have.

Home Equity

For example, a common objection to exemptions and asset value is the home. If you claim that your home is worth $200,000 and your exemptions protect $20,000 worth of equity in the home, the creditor may object to the value of the home. In the above situation, as long as you had less than $20,000 worth of equity in your home, your home would remain safe from creditor seizure. However, if your creditor believes the home is worth $210,000 that opens up a problem. With your home worth $10,000 more, you have potentially too much equity (in this example, you may have $30,000 worth of equity) which may put you over the exemption limitation. The creditor may wish to sell the home to seize the value to use to repay the debt.

Your Attorney Should Rebut

If you are faced with any type of objection to the value of your assets like this, you need to simply work with your attorney to outline the value of that asset. In the case of a home, an appraisal done by a third party is helpful or using comps from recent sales in the region. In short, you need to show that the objection to exemptions is incorrect by showing proof of the value of the asset, generally from a third party organization.

It can be complex to handle such situations on your own. If you are facing an objection to exemptions, it is best to contact your attorney and allow the attorney to handle the circumstances.