We consulted with a divorced man who rented his home, owned a car that was worth $9,000.00, and owned additional personal property valued at $4,338.44.
Our client’s debt totaled $288,179.42, and was 100% unsecured. It was mostly comprised of a deficiency on real property that he used to own that was sold in a foreclosure sale, as well as some medical debt, and personal loans. Besides the foreclosure judgment, there was 1 other judgment that had been entered against our client.
Our client was employed. His monthly expenses ($3,027.34) exceeded his monthly income ($2,841.97) by $185.37. We filed a Chapter 7 bankruptcy case.
Our client owned non-exempt personal property worth $13,338.44, and was entitled to personal property exemptions totaling $6,000.00. As such, he was $7,338.44 over the allowable exemption limit (mostly due to the value of his car). This was something that we discussed with our client in detail before filing his bankruptcy case. Because he was made aware that if he wanted to keep his car (and all of his other personal property) that he would likely have to repurchase his interest in those items from the bankruptcy trustee, he made sure he had access to money that would allow him to settle with the trustee.
At the Meeting of Creditors, we reached an agreement with the trustee, whereby our client paid him $7,000.00 to keep his car and the rest of his personal property. Our client got to keep 100% of his assets, his creditors go to share in the $7,000.00 recovery on a pro rata basis (after the trustee recovered his fees and costs), and the remainder of his debt was discharged.
This case was a good example of why it is important to hire an attorney (and the right attorney who has an excellent relationship with the trustees) to file your bankruptcy. We have attended countless Meetings of Creditors where we have witnessed debtors in the same situation as our client who are visibly shocked to learn for the first time that they will either have to pay money to the trustee in order to keep over-exempt assets or surrender said assets.