The Bankruptcy Information Sheet is available as a handout at the meeting of creditors. The Bankruptcy Trustee will ask each individual whether they have read it. Although the Bankruptcy Information Sheet is published by the Office of the United States Trustee, it contains Chapter 7 information that is misleading, including:
Chapter 7 – A trustee is appointed to take over your property. Any property of value will be sold or turned into money to pay your creditors. You may be able to keep some personal items and possibly real estate depending on the law of the State where you live and applicable federal laws.
For a Chapter 7 case filed for a Washington resident, an accurate statement would be:
Chapter 7 – A trustee is appointed in every case. Your property becomes property of the bankruptcy estate. Your exempt property is abandoned from the bankruptcy estate upon your exemptions becoming effective. There is almost never any non-exempt property for a trustee to sell in a consumer bankruptcy case.
We carefully screen each bankruptcy filing to ensure that all property can be claimed exempt, based on the values that are stated for each item. If the trustee claims that there is non-exempt property, you’ll be notified through an objection to exemptions, and then have an opportunity to contest any sale. If non-exempt property is sold, such as a home in which your equity exceeds your homestead allowance, you’ll be entitled to a cash payment for the amount of your exemption.
Please contact us if you have any concerns over the issues raised by the Bankruptcy Information Sheet, which is set out below in its entirety.