Legal Question in Bankruptcy in California

Re: procedure and values of liquidation in bankrupcy

Although anything is theoretically possible, I doubt anybody is ever going to invade your home and take your personal property, whether or not you file for bankruptcy.

Re: procedure and values of liquidation in bankrupcy

In bankruptcy, you would list all of your assets in your bankruptcy petition, schedules and statement of affairs. In your bankruptcy schedules, you would use one of two sets of law here in California to protect, or "exempt" as many of your assets as you can. The items that cannot be exempted are possibly subject to liquidation. The Trustee (a third-party who is assigned by the Court to administer your case) will review those documents filed with the Court, and determine if there are any assets that are capable of being liquidated to repay your creditors some or all of what they are owed. This analysis starts with the pressumption that you have told the truth in your petition and schedules (you do sign them under oath), and then looks at the types of non-exempt assets, and whether they are easily capable of liquidation, and if they are liquidated, by the time the costs of liquidation are deducted, is there anything left to be paid to creditors. Sometimes an asset might be non-exempt, but may not be easily sold, so the Trustee may abandon it. None of this, by the way, is done by someone walking into your house and simply taking things - there is a lot of court procedure before anything gets sold, and you will have the opportunity to surrender the assets to the Trustee rather than them coming and taking them from your home. You also may have the right to buy-back some of your assets from the bankruptcy Trustee.

The only way you will know if your assets are even subject to liquidation is to meet with a qualified bankruptcy attorney. They generally offer a free initial consultation, and while during that consultation they won't generally tell you yes or no that some assets may be subject to liquidation or not, they will be able to give you some general rules of thumb.

I will warn you - the only time you will have someone come to your house and root through everything you own is if you lie to the bankruptcy court when you file, and they discover it. Then, the bankruptcy court has the authority to conduct a full-blown investigation into your affairs, which might include an inventory of your assets. This is rare, but the message is clear - be honest and completely up front about everything.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.