Because the main job of the Trustee is find any assets that you might have with equity, sell them, and use the proceeds of the sale to pay towards the unsecured creditors that are to be discharged in your case. But that doesn’t necessarily mean that there is anything in your particular case that the Trustee is interested in. The Trustee isn’t going to waste his time with assets that do not have substantial market value.
To begin with, a bankruptcy Trustee is the person hired by the federal government to oversee your bankruptcy estate. He/she is the individual whose job it is to look into and ask questions about what you own. If the Trustee determines that there are such assets, then he/she has the option of liquidating them. Which assets will the Trustee truly be interested in? Let me give you a few examples: If you own a car with a great deal of equity, then the Trustee is probably going to want to at least look into the value of the automobile, so as to make a proper determination. If there is significant value, the Trustee will demand turnover. In a Missouri bankruptcy, you are given a $3,000 exemption to cover any equity that may exist in your car. So if you currently owe $7,000 against the car, and the fair market value (usually, Blue Book value) is $9,000, then there is $2,000 worth of equity in the asset. But after you apply the $3,000 exemption that the government gives you, the equity is eliminated (in fact, you’ve got $1,000 to spare).
Sometimes, there are situation in which the value of your asset exceeds the exemptions that you have available. What do you do then? Well, to be honest, one option is to simply not file for bankruptcy. Because if you know there is a risk of losing the asset to the Trustee, then it becomes a question of whether or not you want to hold onto the asset (but keep all the creditors who are calling you non-stop), or risk losing the asset (but get rid of all the unsecured debts, like credit cards, medical bills, payday loans, etc.) Additionally, there is also an opportunity to try and cut a deal with the Trustee. So if you file a St. Louis Chapter 7 bankruptcy, and you have a car that is paid in full (and therefore a lot of equity), it’s possible to try and work something out. For instance, if your car’s Blue Book value is $5,000 (and there are no liens against it), the Trustee might want to liquidate the vehicle because of the extra $2,000 worth of equity. But if you want to keep the car, you can make an offer to the Trustee to buy out the equity (because to be honest, the Trustee could care less where the money comes from; either through the sale of the vehicle to the highest bidder, or by you buying out the equity).
The St. Louis bankruptcy lawyers at Brinkman & Alter, LLC have been dealing with Trustees and rules of bankruptcy for years. Our staff is prepared to guide you through the process, and make sure that all your options are laid out for you. Whether you file a Missouri Chapter 7, or a St. Louis Chapter 13 bankruptcy, our bankruptcy attorneys want to get you the fresh start / clean slate you deserve.