As part of the preparation of bankruptcy schedules, we need to value all property owned by a debtor (an individual person, a couple, or a business). Different issues come up in valuing assets, which is why bankruptcy is much more than just filling out forms.
It’s easy to value some property. Bank of America bank accounts with $300 on the date of the bankruptcy filing are worth $300. 10 shares of stock worth $50 per share would be valued at $500.
It’s harder to value other property. A typical family of 4 will have plenty of used clothing at home. But used shirts, either designer or off the rack, are going to be worth much less when they’re worn for a few weeks or longer. A $100 purchase from JC Penney or Wal-Mart 6 months ago is not going to hold its value.
What about those season tickets for the Chiefs or Kansas Jayhawks basketball? What about a fractional share of land with family held in trust?
Cars and real estate are tricky too. We can get opinions on what each is worth, but these can vary. Homes are only worth what someone is willing to pay for them. Sometimes houses are appraised for much higher than that value to justify loans or refinancing. The District of Kansas and the Western District of Missouri have general frameworks for evaluating vehicles, but we can deviate or go away from these guidelines for things like cars that have been in accidents or are not operational.
Valuing property is an important job because it’s required and also because these values are our clients’ testimony under the penalty of perjury. So if we list that our client has $1000 in used furniture and furnishings, and there is an apartment or house fire, insurance companies can use that $1000 value in determining what to pay out on a claim. If we list the value of a personal injury claim as $10,000 (normally we would just list “unknown”), that can be used in settlements or trials as evidence.
We’ll spend the time asking about a variety of assets. We know that in all but a very weird handful of cases, nobody has airplanes (aircraft and watercraft are a specific category of property on the bankruptcy paperwork) but we do care about what property is worth. Before we go on to examine exemptions (protection on the property from creditors), we need to understand what property is really worth to advise our clients properly.
Bankruptcy schedules are more complex than they appear, and each schedule has important effects in and outside of bankruptcy. For that reason, we don’t advise filing without an experienced bankruptcy lawyer. At WM Law, our attorneys with bankruptcy experience work with our clients to fill out the bankruptcy schedules and statements and can answer questions on different types of assets.
For help in valuing property and proceeding through Chapter 7, 11, 12, or 13 Bankruptcy, give WM Law a call or visit our website at www.kansascitybankruptcy.com to discuss.
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