As an Asheville bankruptcy lawyer, I frequently explain that disclosing and valuing assets is an important part of protecting the stuff you own in a bankruptcy case. You can assign a value to your house, cars, or personal property before filing for Chapter 7 or Chapter 13. The value you assign will serve as a guide to the trustee, and should be derived from the best evidence available to you.
In North Carolina, the state exemption statute generally allows for $35,000 of equity per spouse ($70,000 for a married couple) in a home where you are living. Equity is defined as home’s value reduced by any mortgage, judgment, or tax liens outstanding on the property. For a home worth $200,000, with a $150,000 mortgage, the equity is $50,000. That equity can be further reduced by the costs of selling the asset, and for a home that is generally the 6% realtor commission. Many times, I have no real issue regarding a home’s value and will recommend using the most recent tax assessment as a guide. If the equity in a home approaches the exemption limits, I recommend either a Broker’s Price Opinion (typically done for free or a very small charge) or full appraisal (costs more) to be sure you have a correct value before filing a case.
Cars follow the same equity principles described above for homes. We take the car’s full value, subtract the loan balance, and arrive at the total equity owned in the car. By North Carolina law, a client can protect $3,500 of equity in one vehicle ($3,500 each for married couples). I frequently help clients use their ‘wildcard’ exemption of $5,000 per spouse to protect cars with a large amount of equity. The NADA value is used as a starting point to figure out a car’s value, but I frequently advise clients to have their cars appraised by dealers in order to get a more accurate picture before filing if there is a risk of reaching the exemption limits.
It is very rare for normal household items to have more value than the $5,000 per spouse exemption limits. Kitchen supplies, furniture, yard tools, clothing, and basic household necessities rarely have much liquidation value. A couch can cost more to move and sell than it will bring. If you have an abnormally expensive piece of furniture, like a pricey antique or grand piano, it may be wise to get those ‘special’ items appraised. However, in a standard case, appraisals are rarely needed on personal property, and we can use your best guess as to what your stuff is worth.
Good Faith Effort To Disclose Value
Valuing property correctly is a key part of a successful bankruptcy case. Beyond value, disclosing all your assets on the bankruptcy petition is the most critical factor for a smooth case. The value assigned to your property will be used as a guide by the trustee, and can be estimated by using the best evidence available or attainable.
If you would like to discuss these issues, or issues more specific to your financial situation, please contact me for a free, initial bankruptcy consultation.
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