I can’t believe it has been almost a month since I last posted! I have been busy filing Chapter 7 and Chapter 13 bankruptcy petitions for my clients who live in Indianapolis and the surrounding areas. If you have read this blog before you know that for each bankruptcy petition I file there is at least one hearing in the federal court located in Indianapolis. These hearings are referred to as 341 hearings and are presided over by a trustee, who is an attorney appointed by the United States Trustee’s Office to administer bankruptcy petitions. For purposes of this blog I want to focus on Chapter 7 bankruptcy and a trend that I have noticed over the past few months at my 341 hearings.
Each time I attend a 341 meeting of creditors with a client it is assigned to one of the different bankruptcy trustees assigned to the Indianapolis Division of the Southern District of Indiana Bankruptcy Court. And each time I go I hear will typically hear the trustee call a few other cases while I am waiting for my client to be called. Over the past few months I have noticed that the trustees are reviewing the assets of my clients more carefully than had been my experience in the past. Specifically, the trustees are much more interested in the values that debtors are assigning to their homes and personal property.
It makes perfect sense to me that the trustees seem to be examining the values of debtors homes carefully. Home values in the Indianapolis area have been on the rebound of late and there is a better chance that an individual debtor has more than $17,600.00 in home equity or joint debtors have more than $35,200.00 in equity in their residence. These numbers are important because they are the amounts a debtor or debtors are allowed to exempt (or keep) in bankruptcy. In the event that an individual debtor has $35,000.00 in home equity it may be possible for the trustee to sell the home and give the debtor $17,600.00 from the proceeds of the home or ask the debtor to pay $17,400.00 (or some other negotiated amount) to the trustee so that he or she can pay this amount as a dividend to the debtor’s creditors. The trustee has a duty to the creditors of a bankruptcy person to collect any un-exempt assets of the debtor(s). Let me say that again….the trustee can and will seize un-exempt assets for the benefit of creditors.
In 2008 and 2009 the trustees were aware that the housing market was in a very bad place and were more willing to accept a tax assessment as fair market value of a home. However, now the trustees are being careful not to overlook a potential asset they should and could take for the benefit of creditors. As a bankruptcy attorney I am attempting to assist my clients by making sure that we have substantial evidence of the value of a home that a debtor or debtors own. In addition to the tax assessment I am talking to my debtors regarding what similar homes are selling for in their neighborhood. Sometimes I will also ask my client to obtain the opinion of a realtor regarding the value of their home. Having this information before filing Chapter 7 bankruptcy is important. This information could lead a debtor to choose to file Chapter 13 bankruptcy instead of Chapter 7, may lead me to advise a client to avoid bankruptcy altogether, or may lead me to advise a client to put the house on the market for sale. If a Chapter 7 bankruptcy is filed my client will be able to tell the trustee the value of their home and how they came to that value with confidence.
But it’s not just homes that the trustees seem to be concentrating on of late. In my opinion, the Indianapolis trustees also seem to be taking more of an interest in the value of cars and firearms. Again, an individual or couple who files for bankruptcy may exempt $9,350.00 for an individual or $18,700.00 for a couple in personal property. Personal property means equity in a vehicle to furnishings, jewelry, tools, collectibles, etc. Luckily, it is fairly easy to check the value of a vehicle. The NADA valuation can be quite helpful or even taking the vehicle to Carmax to see what they would be willing to pay for it. Firearms can be more challenging to value. With the rise in the value of firearms and the ease with which a trustee could take and sell a firearm it is very important to be able to give the trustee a good answer when asked how the debtor came to the conclusion that the firearm was worth x dollars. One of the best places to look for the value of a firearm is on the internet. Make sure you are comparing your exact firearm with other of the same make, model and condition. It is a great idea to print out a few for sale so that the attorney can keep them in your file. At the 341 hearing you do not want to be the person who is asked what the value of your firearm is and answers that you don’t know or the person who says they just guessed as to the value of a firearm. You want to be the person who answers with confidence and is able to tell the trustee how you reached your conclusion.
The bottom line is that although the job market is still tough, gas prices and food prices are high and many are still struggling to make ends meet that less Chapter 7 bankruptcy petitions are being filed in the Southern District of Indiana, Indianapolis division. In fact, recently one trustee decided to retire and he was not replaced with a new trustee. The trustees have more time to examine each bankruptcy petition because there are simply less people filing bankruptcy than there were in 2008, 2009 and 2010. However, if a bankruptcy petition is completed properly with advanced investigation into values a debtor should not be worried that the trustees have more time or are looking harder at valuations. So long as the proper work is put in on the front end by the debtor(s) and the attorney the 341 hearing should go very smoothly.
With what seems to be a deeper investigation into the value of homes and some personal property I believe it is very important to have the peace of mind that an experienced bankruptcy attorney can provide. I have had hearings in front of each one of the 15 (soon to be 14) different Chapter 7 bankruptcy trustees in the Southern District of Indiana, Indianapolis Division. I meet with my clients personally to prepare and file the bankruptcy petition and am there to advise them of the questions their trustee will likely ask at the 341 hearing. I sit with my clients at the hearing. I have never had a lawyer from another law firm cover one of my hearings. If you are struggling with debt and want to discuss whether or not a Chapter 7 or Chapter 13 bankruptcy could help I offer an initial case evaluation at no charge. To set up your appointment at my Carmel, IN office call me at 575-8222 x. 12 or click here.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.