Credit Crunch Affecting Chapter 7 Trustee Property Sales: More Leverage To Debtors

Credit problems are affecting Chapter 7 Trustees as well as Chapter 7 debtors. At a recent creditor meeting a Trustee explained to me that tightening of credit in the general economy is adversely affecting the trustees ability to liquidate non-exempt assets for creditors. Trustees gather debtors’ non-exempt assets and sell the assets either to the debtors or to the general public at auctions. Cars are sold at car auctions and other personal property is liquidated at property sales. The trustee told me that in a normal economy buyers at trustee’s auctions often pay for bankruptcy property with credit cards or bank lines of credit. In today’s economy fewer potential buyers have been attending bankruptcy auctions and bids are lower, largely because of the recession and credit crises.

As a result, the Chapter 7 trustees are realizing that non-exempt property will bring less money at auction than in a normal economy. This situation give debtors relatively greater leverage to negotiate the value and the repurchase from the trustee of their non-exempt property. With sales at public auctions less lucrative to trustees because of general credit problems, the debtor is the person most motivated to find money to retain his non-exempt assets. Trustees may be recognizing that the debtor’s offer to repurchase his non-exempt property will be the best offer available to today’s economy.

posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida

Comments

[Trustee Sales AZ]

Many trustees across Phoenix are recognizing this as we speak. We see the tightening of credit the most stringent here. Things are so messy, so messy...