Q: Trustee objected to exemptions due to me exceeding limits. Should I amend my schedule C? It is for chapter 7
I have 44,000 in equity for my home, I am still paying mortgage, completed reaffirmation agreement that lender sent. The allowed exemption was 27,900. I have the same issue with my car, I do not own, however there is 7,000.00 in equity, the trustee states I only can exempt 1475.00. I am up to date with payments and also completed reaffirmation agreement. I attempted to exempt personal property like clothes, furnishings, etc but will exclude those from schedule C. No creditors have objected to the bankruptcy.
A: It doesn't mean anything if no one objected. Most creditors don't, but the Trustee may do so for the benefit of all creditors. If you have exceeded your exemptions, amending your schedules won't make any difference (it is a question of fact, not just about what you assert on your schedules). If the Trustee is already asking questions, he/she may demand that you turn over any equity to be distributed to creditors (or may sell the property to liquidate that equity). Also, how do you have equity in your car if you don't own it? That doesn't make sense. If you don't have a bankruptcy attorney handling this, you need to retain one ASAP to address the equity in the home. Determining whether there is equity and what exemption you have available depends on different factors, which can't be determined here. You need a bankruptcy attorney to look over all your financial details.
Timothy Denison agrees with this answer
I agree with the first answer by Ms. Lipan, as far as it goes. You need the guidance of experienced Michigan bankruptcy counsel.
More specifically, with respect to your home property, it is usually acceptable to deduct ten (10%) percent from gross value as "costs of sale", and that reduction may resolve your "over exemption" value. As a practical matter, most bankruptcy trustees look for sufficient value to return a substantial amount to the estate to cover trustee's costs, including attorneys and accountant's fees, and costs of sale, before moving to sell an essential asset of the debtor.
As a practical matter, I advise my bankruptcy clients to procure an appraisal, prior to filing the case, from a credentialed appraiser willing to testify about the property value in court, if need be.
Timothy Denison agrees with this answer
A: Exemption planning is more of an art than an exercise. You should be careful about how you exempt property when updating your petition. Contact a licensed bankruptcy attorney to help you with that part of things, or to represent you on this one. You could lose more than you gain without the correct information.
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