I am a former Chapter 7 Bankruptcy Trustee appointed by the U.S. Trustee’s Office in Washington D.C. As a result of my service as a Chapter 7 Trustee and experience as a bankruptcy lawyer, I have gained insights into not only the legal aspects of overseeing Chapter 7 bankruptcy cases but also the practical aspects of how a Chapter 7 Trustee handles their cases.  Keep in mind that the primary job of a Chapter 7 Trustee is to locate non-exempt assets of a Debtor filing a bankruptcy case, take them, sell them, retain a percentage fee and provide the remainder to the unsecured creditors who file claims in the case.

When will a Chapter 7 Trustee require an appraisal of personal property?

Answer: Maybe.

Chapter 7 Trustees don’t ordinarily require an appraisal of your personal property.  However, certain factors come into play in determining whether a Chapter 7 Trustee will request an appraisal of a Debtor’s personal property such as household goods and furnishings, jewelry, collectibles, antiques and vehicles.  Some of those factors that a Chapter 7 Trustee considers are:

  1. Extremely low values of property listed on the bankruptcy schedules based on the specific facts of the case.  For instance, if the Debtor(s) live in a very valuable home and only list $500.00 worth of household goods and furnishings, a Chapter 7 Trustee will probably send an appraiser to verify the value(s) stated in the Petition.  One way to head off a Chapter 7 Trustee’s demand for an appraisal is to provide pictures and/or purchase receipts of the household goods and furnishings listed in the bankruptcy schedules at the time of or before the date of the Meeting of Creditors with an explanation (i.e. property purchase at a thrift store).  Some Chapter 7 Trustees have a standard procedure that they will send out an appraiser to appraise a Debtor’s household goods and furnishings if the value of their home containing the assets exceeds, for example, $100,000.00.
  2. Listing little or no jewelry on the bankruptcy schedules and appearing at the Meeting of Creditors wearing jewelry or testifying that they own valuable jewelry.  For example, some Chapter 7 Trustees will assign a value of a $1,000.00 or more to an average quality 1 carat diamond solitaire ring. The Trustee may then request an appraisal of the jewelry along with any other jewelry that may or may not have been listed in the bankruptcy schedules filed in the case.  Please be aware that when a person files for bankruptcy they must list all of their assets at their proper values on their bankruptcy schedules.  A Debtor is swearing under oath or affirming that, among other things, all assets are listed properly at their correct values.
  3. Listing a vehicle on the schedules at a value substantially lower than the value assigned to it in Kelley Blue Book or in USDA Guides without also describing the condition of the vehicle such as mileage, defects, accident history, etc. Supplying pictures of the vehicle at the time of the Meeting of Creditors will normally satisfy the Chapter 7 Trustee’s concern over a much lower value placed in the schedules and prevent the Trustee from sending out an appraiser.
  4. Unusual items of a collectible nature and antiques.  Examples of when a Chapter 7 Trustee may require an appraisal may include antique furniture or items, baseball/football cards, rare collections and autographed items (particularly if the signer is deceased).

If a Chapter 7 Trustee requests an appraisal of some or all of the Debtor’s property, it doesn’t necessarily mean that the Trustee believes that a Debtor is not telling the truth. The Trustee knows that many people are not fully aware of the true value of their property.  

An experienced bankruptcy attorney can assist a Debtor in preparing the schedules in a comprehensive way that will often avoid having the Chapter 7 Trustee feel the need to send out an appraiser to determine property values. No one likes to have an appraiser go through their home looking at their property or inspecting their vehicle.  

It may become necessary for a Debtor to obtain an appraisal of some or all of the property listed on the schedules prior to filing the bankruptcy.  An experienced bankruptcy attorney can arrange a  pre-bankruptcy appraisal with an appraiser who is known to both the attorney and the Chapter 7 Trustee.  The resulting appraisal usually provides a large degree of comfort to the Chapter 7 Trustee as to the accuracy of the values listed on the bankruptcy schedules and can avoid the need of the Trustee to send out a different appraiser with values possibly more favorable to the Trustee.  It is important to note that when a Debtor seeks an appraisal prior to the filing of the case, the appraiser is employed by the Debtor and paid by the Debtor.  If the Chapter 7 Trustee seeks an appraisal after the case is filed, the appraiser utilized by the Trustee is not paid unless the bankruptcy case is an “asset case” (where the value of the assets exceed the exemptions allowed for the particular property listed in the bankruptcy schedules).  An “asset case” would require either that the Debtor give up a portion of his/her property to the Trustee to be sold and the proceeds distributed to the Debtor’s unsecured creditors who filed timely claims in the case, after the Trustee receives his/her fees or, that the Debtor, through his attorney, arranges a “buyback” of the assets in some fashion with the Trustee where the Debtor’s would negotiate with the Trustee to pay funds to the Trustee in an amount approximating the value of the non-exempt property.  This is why it is extremely important for the values listed in the schedules to be accurate,.

For more information on how an experienced bankruptcy attorney can utilize an appraiser to assist in protecting a Debtor’s assets from being taken by the Chapter 7 trustee or to schedule a free initial consultation to discuss how I may be able tp assist you, call me, at (727) 898-2700 (Pinellas County) or at (863) 802-4700 (Polk County).