When you file a Chapter 7 bankruptcy in Visalia, or any bankruptcy for that matter, one of the factors to determine if you will have to surrender some of your possessions is if they have any value. So what is the trustee looking for and how do you value items to make sure when filing you know what you are getting into?
First off, use an experienced bankruptcy attorney. Each district has its quirks and opinions on what something is worth, same happen with Visalia and Fresno. Ultimately you only find out the value of something by selling it, but if you want to keep it, then it is too late if it gets taken and sold. By using a bankruptcy attorney, this person will be able to give you a realistic opinion on how your items will be valued.
This is how a good bankruptcy attorney should be looking at when valuing the following items:
Houses: This is the most difficult, as a house is worth what someone is willing to pay. First stop is Zillow or a similar site to check if homes have sold recently. If the house value is close, then you may want to spring a couple hundred for an appraisal. This gives you a firm idea of what the house should sell for. When the trustee values the home for sale, they should deduct the cost of sale (6-8% typically) from the value. Once again, be prepared if close to take actions to protect the house if you are running against the limits of your exemptions. If you think a home is worth 300k, and the trustee 305k, that little extra may be all it takes to push the house on the market, so be ready.
Vehicles: Cars are bought and sold all the time so getting a value is a little easier. First stop is Kelly Blue Book, or NADA to get a value. Standard is KBB, good condition, private party buyer, but the trustee will argue for a higher value. If your car has damage, or the transmission is shot make sure that is documented. If your car is old, but low mileage and well maintained, be ready for a higher value. Do not just take the web site’s value as gospel. Use common sense. Be honest about the value as well, as lying about it only makes it more difficult when negotiating a value if it comes to that. One last thing about vehicles, if it is a toy (dirt bike, quad, low level boat), it is worth a lot less than you think. You may want to use craigslist as a way to establish a going value.
Tax refunds: Tax refunds are an asset. If you file on July 1 of 2014, then the refund you receive in 2015 will be partially owed to the trustee. Technically, unless you file on January 1 of a year, any refund may be liable, but in my experience, this generally starts around July. So for the July 1 example, it would be based on wages earned up to that point. Since you do not know for sure what you will make for the rest of the year (usually) or what will happen to the tax code, you have to estimate. Usually what I do is take last years, adjust for any increase in income, then tack on a 5-10% margin to make sure there are no issues.
Jewelry: I hate to tell you, you overpaid. Your $5000 engagement ring cannot be sold for that. My short hand is half the value of what you paid. Sometimes even less.
Guns: These have there own special category. The value of guns tends to swing. At times it has been 50% of retail to over what you pay retail. Right now I use retail. Ask your bankruptcy attorney how these are trending to make sure the value is correct. Guns are easy to sell so a trustee will go after them if not properly protected.
Tools: These are like jewelry. You overpaid. Unless you have top of the line, professional equipment, the value drops pretty quickly once purchased. Use what you think you could get for them at a yard sale.
Livestock: This varies greatly depending on region. If you are a large dairy going bankruptcy, your herd is worth a lot more, per cow, than an individual with one cow that has become a pet. Horses have swung wildly in my area. They used to be worth $10,000 or more on the low end. Now you give them away, if you are lucky. This is a bit of a specialty, but if you own the animal, I should hope you are qualified to give your attorney an honest opinion as to their worth. If large enough in quantity and value, it may pay to have them appraised, just like a house, as to value.
Burial plots: Call the cemetery and ask. It is usually worth more than you paid as most people with these buy them far in advance of needing them. Just call and ask.
Bank accounts, stocks, bonds, bars of gold: Confirm Market value or balance the day you file from your attorney. Make sure it is the day you file, and not the day you fill out the paperwork for your bankruptcy consideration. If it takes a couple months to file, the value may have changed significantly. Double check before the paperwork is filed.
The rest of your stuff: No one cares about most of your stuff. Your washer and dryer, fridge, clothing, couch, etc, while having value, are not going to be taken. Do your best to give them a lump sum yard sale value, and move on.
I hope this helps in determining the value of your possessions. There are other ways to value things, but you want to be realistic in how you value items. The last thing you want is for something to be sold to figure out how much is worth.
