Wednesday, June 6, 2012

The Bankruptcy Trustee and the Home Visit – or lack thereof….

Ryan Hackett, Chapter 7 & 13 Bankruptcy Attorney
As I talk with clients about their property being listed in their petition I am often asked if the Trustee will come to their home for a walk through to look at all of their belongings.

Although the Trustee has the power to do that, they simply don’t. Our office has handled well over 1,000 bankruptcy cases throughout Oregon and SW Washington. We have never seen a Trustee go to our client’s property and look through their home.

There are a few reasons that a bankruptcy trustee is unlikely to come to a debtor’s home and peek around. First, they likely don’t have time to do that. Trustees manage hundreds or thousands of bankruptcy cases and would not be able to do home searches in every case.  Second, they trust that people have listed all of their assets on their petition because they are signed under penalty of perjury and debtors also testify under oath at their meeting with the Trustee that the petition is accurate.  Finally, household items are typically fully exempt. That means that the Trustee is not able to sell or liquidate typical household goods.

The bottom line is that Debtors should list all of their assets and their attorney should properly apply the exemptions to protect the assets. If an asset is at risk of liquidation your attorney can advise you on your options.  Be honest about everything, but you would likely not receive a visit from a bankruptcy trustee to your home if you file chapter 7 or chapter 13.