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. These non-exempt issues can be resolved in one of three fashions.: (1) Turn the property over to the trustee; (2) Buy the non-exempt property back from the trustee; (3) file a Chapter 13, perform a liquidation analysis and account for that L.A. in your plan.

In the second option, the client would only need to buy back the non-exempt portion. For example, the debtor’s automobile may be worth $1,000 more than the amount which can be exempted. In these circumstances, 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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