Chapter 7 Trustees Offer Debtors Practical Tips Concerning Valuation And Buy-Backs Of Personal Property

The bankruptcy committee of our local Bar association holds monthly luncheons. At the most recent luncheon two Chapter 7 bankruptcy trustees discussed the bankruptcy process from the trustee’s point of view and offered a few good suggestions to debtors’ attorneys. One of there comments concerned the treatment of debtors’ household furnishings. Florida law provides each debtor with a $1,000 total exemption for all personal property including bank accounts and household furnishings. This exemption is small compared to most other state’s laws. In practice, few trustees pursue personal property valued slightly over the exemption nor challenge property valuations in most Chapter 7 petitions unless there is a clear reason to doubt the debtor’s property list.

At the bar meeting the trustees suggested that the Chapter 7 trustees may be taking a closer look at personal property lists and values. They indicated that most trustees may be sending an appraiser to the debtors homes to take an inventory whenever the debtor’s home is valued more than $500,000. It is hard to believe, they said, that a home worth more than a half million dollars in today’s real estate market contains less than $2,000 (joint filing) of furniture and electronic equipment. The trustees stated that bankruptcy debtors whose homes and personal property lists will likely be scrutinized consider hiring their own appraiser to value their property before they file their petition and submit their own personal property appraisal to the trustee.

It costs only two or three hundred dollars for an appraisal of household property. In the past, when my clients’ income or house size implied expensive furnishings I have suggested the client retain one of the appraisal firms used by the Chapter 7 trustees so that the trustee would not challenge the appraiser’s credentials.

Whenever a debtor suspects that his personal property schedules will be questioned by the bankruptcy trustee it is a very good ideal to get a preemptive appraisal. When you hire the appraisal you schedule the date and time of the appraisal. You’ll know well in advance when this appraiser will be going through your home to inspect your belongings. Your own appraisal is not binding, and you don’t have to use the results on your petitions is you disagree in good faith with the appraiser’s report.

The trustee speakers offered debtors another practical suggestion when the debtors know they have non-exempt personal property including furniture or automobiles. Typically, trustees and bankruptcy debtors negotiate the amount and terms of the debtor’s "buy-back" of non-exempt cars and personal property at or after the trustee meeting. These trustees suggested that debtors decide what they would like to offer the trustee in payment and then bring a cashiers check for the amount of their offer to the trustee meeting. In other words, make your offer an literally put the cash on the table. The trustees said they are usually willing to accept significantly lower valuations and buy-back offers when the offer is accompanied by certified funds.

Comments

[Gina]

Alex; Just curious. Are the demon trustee initials D J? If so, I know you are spot on in your opinion. Devil with the blue blood attitude.

Beachymama; I feel your frustration. Nothing is fair in the BR system.

Did yall know that whatever "difference-overage" is found, that the trustee GETS A CUT?
Conflict of interest, prejudice, and a loophole they found for bonuses.

[Morgan Eldridge]

The correct type of value is Orderly Liquidation Value. Regardless of what others are saying. This is from The American Society of Appraisers, the largest multidisciplinary appraisal organization in the world. The regulation is from the personal property journal PP/GJ204 V.2/06 which states: Bankruptcies must use either Orderly Liquidation Value or Forced Liquidation Value. Our firm is one of the oldest in the state of Florida and we are actual real, certified and accredited appraisers. The system has no regulations on it, I see it everyday. A trustee sends BK filers to a guy calling himself an "appraiser", who is not, just because he bumps the value way up, in turn he gets more jobs. It angers me because I actually spent the last 6 years getting my REAL accreditation, testing and logging my appraisals to earn my accreditation to have this happen. My work is accepted, never thrown out of court and speaks for itself. I appraise automobiles, whole house inventories, fine art, etc. The chapter 7 trustees have stated that NADA retail value will be used unless a written appraisal is provided by a CERTIFIED appraiser, it also goes on saying that Chapter 7 trustees will not accept carmax appraisals and any others from NON-CERTIFIED appraisers. Now, according to the Internal Revenue Service, Qualified appraiser. A qualified appraiser is an individual who meets all the following requirements.

1. The individual either:
1. Has earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or
2.Has met certain minimum education and experience requirements. For real property, the appraiser must be licensed or certified for the type of property being appraised in the state in which the property is located. For property other than real property, the appraiser must have successfully completed college or professional-level coursework relevant to the property being valued, must have at least 2 years of experience in the trade or business of buying, selling, or valuing the type of property being valued, and must fully describe in the appraisal his or her qualifying education and experience.

ALSO, Appraiser penalties, An appraiser who prepares an incorrect appraisal may have to pay a penalty if:

1. The appraiser knows or should have known the appraisal would be used in connection with a return or claim for refund, and
2. The appraisal results in the 20% or 40% penalty for a valuation misstatement described later under Penalty.

Regards,
Morgan Worth Eldridge, AM
Eldridge Appraisals Inc.
www.eldridgeappraisals.com

[Alex]

I have had problems in Fort Myers as well, and wonder if this is even legal. I had a car that was 9 years old with 120,000 miles on it 'valued' at almost $4,000 over both my wife and my exemption, and taken, even though we were still making payments on the vehicle. We were forced to purchase another car at a horrible loan rate, (24% I think,) even though we had only like ten payments left. The car is in need of major repairs, and will bring $500.00 at auction at the most. This leaves the creditor that we were paying screwed, and the trustee requesting our tax return, (4 months after the creditor meeting on the car and the taxes,)... We have been warned that she will go after our household furnishings, (we live in a trailer,) even though our house is not expensive.

I was humble going in... Now I am angered at the Trustee, and have lost all faith in the Government as it turns towards socialism. My wife and I were at almost $100,000 in income, now we did not break $40,000, and are down to one job.

We were slapped down by the economy, and now by this evil woman they call a Trustee Fort Myers. Maybe when Buddy Hacket said "trust me" is Yiddish for "screw you," he meant to say "trustee".

Sorry, just venting! Buddy used the 'f' word, so I vent polite!

[Joy Augustine]

I am the appraiser in Fort Myers. I am not the "Trustees appraiser" as defined as I am under direction to pad a report to the trustees benefit. I am an independent , impartial 3rd party and I have been court appointed to do bankruptcy appraisals in the Middle District of Florida for over 15 years.

I have to agree that it is most unfortunate that the attorneys continue to tell their clients to use "yard sale" values. Judge Paskay does not want liquidation values used. The appraisal report clearly states that the appropriate value is Fair Market. The highest amount exchanged between willing buyer and willing seller with all relevant facts known.

We are very careful to use appropriate secondary markets for valuation.
To use Beachymamas example, it is quite rare to even find a sofa for $50.00 at Goodwill, much less one that you would actually bring into your home. People don't want to realize that items of differing quality and condition have different values.

I often say to people while I am in their home that if I was doing this appraisal for insurance purposes when you got my report you would say I was crazy, you could never replace all this stuff for that amount but when I do it for Bankruptcy and you get the same value on the property , you will say, "that woman is crazy this stuff isn't worth that much"

I asked one debtor with a houseful of lovely furnishings, why one earth she only listed her entire estate at $1,000.00. Her reply was that she was only allowed that much in exemptions. The truth was irrelevant to her.

People need to hire us before they file bankruptcy. Knowledge is power. Go into this prepared.

Joy Augustine , Read & Kelley Estate Services 239 731 2201

[Beachymama]

In my district, the trustees are known for sending out appraisers (ft. myers).

What is unfair here is that the bk attorney will say use garage sale pricing for your schedules and exemptions, but the hired property appraiser does not.

When I added up my personal property, I used garage sale, craigslist type prices like $5 lamps, $50 sofas, $20 end tables, etc.

The trustees appraiser comes in and values my stuff at $150 sofa or $220 sofa $460 for a 5 yr old iMac and $250 for a Maytag stove that the builder included in the home.

So now instead of $1000 in exemptions listed in my BK filing, I am faced with being $8000 over exemptions because the appraiser overvalues stuff (and I have no antiques or jewelry) to make it look like I have more assets and they want me to pay the inflated prices. Then my attorney wants more money to have a hearing to negotiate!

My house is no where near valued at $500,000 and I am giving up my house, and I am giving up my furniture because I will have to pay $8000 to keep it and then $7000 to move it out of state. I don't have that kind of money.