What happens to my property during a bankruptcy?

It used to be that in a Chapter 7 you could list the value of your property for what it would sell for at an auction. What it would sell for was left up to your own interpretation. Those who were smart, would list their used furniture, cars, antiques, and other property they wanted to keep, with little or no value. Because it was listed as little or no value that property became "exempt property" and could not be taken by creditors or the court trustee. This enabled files to keep most of which they already had.

Now, the courts won’t ask you ..how much do you think your property is worth. The trustee will expect you to specify the cost to purchase it. Not sell it at an auction. Taking into account the property's age and condition of course. At an auction, your used dining room set would sell for little or nothing. But if you were to go into a store and purchase that same used dining room set, it could go for three times as much. This is what the court trustee is hoping for. With this new law the courts look at the purchase price as opposed to the amount you’d get at a fire sale or an auction. Hence, the trustee can raise the value placed on your property, which means more filers will have their property taken and sold by the court trustee to pay off the creditors.