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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Written by Craig D. Robins, Esq.The bankruptcy laws and exemption statutes permit debtors to keep and protect various specified assets in Chapter 7 bankruptcy cases. See Bankruptcy Exemptions in New York .
When an asset is either non-exempt, or greater than the exemption amount, the bankruptcy trustee has the right to liquidate the asset to raise money for the benefit of creditors.
Fortunately for debtors, however, even if an asset is non-exempt or has a value greater than the exemption amount, the debtor may be able to keep it anyway.
Here’s why: If an asset has relatively low value or is hard to sell, the trustee will probably abandon it. In order for a trustee to want to liquidate an asset, there has to be enough net funds to make a reasonable distribution to creditors. If there isn’t, the trustee will walk away.
Also, trustees don’t work for free. Their compensation for liquidating assets comes out of the gross proceeds that they collect. Thus, if a sale will not produce enough to pay the trustee, an auctioneer, and then leave a sufficient net proceeds, the trustee will not bother.
There is no magic amount that trustees will walk away from, but most New York Chapter 7 bankruptcy trustees will not bother to administer any assets that will produce less than a thousand dollars, sometimes even more.
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I recently wrote a post about the additional pressures trustees face in deciding whether to liquidate assets: The Back-Door Politics Behind Trustees Pursuing Non-Exempt Assets .
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Experienced bankruptcy attorneys can do a pretty good job gauging the likelihood of whether a trustee will want to liquidate a non-exempt asset.
More from Long Island Bankruptcy Law Firm Blog
- Sometimes Debtors Can Keep Non-Exempt Assets in New York Chapter 7 Bankruptcy Cases
- How Does a Chapter 7 Bankruptcy Trustee Sell Assets
- How Much Do Chapter 7 Bankruptcy Trustees Get Paid?
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