Retaining Nonexempt Property in Chapter 7 Cases

In consumer chapter 7 bankruptcies, although the trustee pretty clearly has a right to take possession of totally nonexempt property prior to the 341 meeting of creditors, this rarely occurs. All parties recognize that when such property is of nominal value, the simplest method of disposition is to sell it back to the debtor.

For example, the debtor’s automobile may be worth three thousand dollars more than the amount which can be exempted. Usually, terms can be arranged for a payment to the trustee in lieu of turning over the car. As long as the case will not be delayed, the trustee should be willing to accept payment in installments.

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