When you decide to file for bankruptcy, one of the tasks you will need to do is list your assets. This helps the trustee determine which assets are exempt, which means you can keep them, and which assets are not, which means they can be sold to repay your debts, if you are filing Chapter 7 bankruptcy. It also helps the trustee determine if you can file Chapter 7. Determining which assets to list and how to do so can be challenging.
One thing to remember is that the trustee is interested more in the value of the item than in what it actually is. For instance, that couch that you paid $1,000 for six years ago is not worth $1,000. It may be worth $100, depending on how worn it is. You can use tools like eBay or used furniture sales websites to determine an accurate value for many items.
Simply listing “couch” is not sufficient. You most likely need to list “couch, six years old, $100.” This allows the trustee to see exactly what it is and how much it is probably worth. If your state has a $1,000 furniture exemption, this is a very important step.
Remember that you must list all of your assets under federal bankruptcy laws. If you do not disclose everything, and you are found out, the courts could deny your case. Sometimes people try to hide an asset because they fear they will lose it simply because they disclosed it. While this is a possibility, it is not a guarantee. In fact, statistics show that it is less of a possibility than you might think. Only about four percent of all Chapter 7 cases end up having an asset valuable enough to give to the trustee. Most of your property is protected under exemptions, but exemptions will only be applied if you properly list your assets.
Large items, like furniture or potentially valuable collections, may be best listed itemized. However, some items are not necessarily best itemized. For instance, if you are filing for bankruptcy in Arizona, you receive a $500 exemption for your clothing. Unless you have an extremely valuable wardrobe, this is likely more than sufficient to cover your clothing. Used clothing is simply not worth that much money, even if it was high-end designer stuff when you bought it. You can simply list “clothing” without needing to list every item.
However, larger ticket items, like your exercise equipment, does most likely need to be listed in an itemized fashion. Your exercise equipment cold be something simply like an exercise ball, or it could be much more intricate, like an entire basement full of weight machines and cardiovascular equipment. By listing these as an itemized list, you are better capable of showing their true value to the trustee.
If you do not itemize, the trustee is likely going to spend a long time going through your records to determine if you are trying to hide something of value. This makes it more likely that he will find errors in your case. You do not want this. It is far better to be as open and honest as possible when listing your assets.