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How far will a trustee go to find assets?

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  • How far will a trustee go to find assets?

    I am a physician who is being forced into Chapter 7 due to tax issues.
    While the equity in my house is tied up with a tax lien, I still have some assets in jewlery and antiques.
    My worry is that a trustee will come in and bring an auctioneer or estate liquidator and take everything not exempt. I will value everything low, but many items would appraise higher if the trustee wanted to be diligent; this would mean going to an appraiser for a true evaluation.
    I am talking about a wholesale value of about $50-60,000 overall.
    Can anyone give me a clue about how these trustees work? Will they go to your homeowners policy to see if you have listed high-priced items? What about going to your credit card records and bank records to see your record of cashed checks? To do due dilligence it would take them months. Or, are they really interested only in cash, land and easily saleable items?
    I assume some are knowledgeable, but how many of them can discern value in different art/jewelery categories?
    Also, if you have a small item of considerable value, why not just keep it in your pocket?
    I know the lawyers tell you to be completely honest in declaring everything of value, but you cannot tell me that some people haven't been burying stuff in their backyards long before they filed.

  • #2
    It seems to vary quite a bit. If someone happens to have a larger home (sq footage, big mortgage) on a lake with an eight-car garage, that trustee would probably be pretty suspicious if they claimed $3000 worth of household items, no boat, one car, and $400 in jewelry. Not sayin' that's your situation, of course. Just using an example. It's perfectly ok to assume garage-sale value for your stuff. Just know it's also perfectly ok for a trustee to request an appraiser's involvement if they don't think the whole picture "gels." Only you (and hopefully your lawyer) will know if the big picture makes sense.

    People probably do hide assets. And they run the same risk: losing all of it. And a very nasty battle with a PO'd US Trustee. I believe they have authority to request assistance from the FBI. So assume they can get just about any info they want. I'm going to guess it's pretty tough to fight something like that when all of your assets are frozen. If they suspect there's paydirt to be found, then assume they'll happily drag the process out for however long it takes to strike it. If you're not forthright and they figure it out, they can take all of your assets, not just the ones that cover the debt you owe. Nothing left for you. Zero.

    Last, hiding assets is fraudulent and it's unlikely that anyone on the forum will offer advice on how to do it. Probably because they love you and don't want you to go to jail!!! Best bet: be honest. A good attorney will help you plan a BK and help you protect your assets within the letter of the law. Best of luck.
    OK - from now on it's not a "Bankruptcy." It's a "Weight Loss Program." I'm in. Sign me up.

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    • #3
      Originally posted by URODOC View Post
      I will value everything low, but many items would appraise higher if the trustee wanted to be diligent; this would mean going to an appraiser for a true evaluation.
      I am talking about a wholesale value of about $50-60,000 overall.
      The trustee will likely ask you how you arrived at the stated value. If you bring in your own certified appraisal, the trustee will most likely accept it. They can and do order bankruptcy appraisals when warranted.

      Originally posted by URODOC View Post
      Will they go to your homeowners policy to see if you have listed high-priced items?
      Yes. This can and has happened. I have read about cases dismissed for bad faith/totality of circumstances because of a discrepancy here.

      Originally posted by URODOC View Post
      What about going to your credit card records and bank records to see your record of cashed checks?
      This can also happen. If the credit card issuer is also a creditor included in the filing, they have a record of your purchases and can compare this to your stated assets and raise the issue. The trustee can also request the records.


      Originally posted by URODOC View Post
      I assume some are knowledgeable, but how many of them can discern value in different art/jewelery categories?
      They would order an appraisal.

      Originally posted by URODOC View Post
      Also, if you have a small item of considerable value, why not just keep it in your pocket?
      Personal ethics & risk assessment decision. If you can lie with a poker face, are certain you won't get caught, have no anxiety attendant on the disposition of your case, have no paper trail leading to the faberge egg, and can look in the mirror for the rest of your life and like the person looking back, I guess you could just keep it in your pocket.
      There are two secrets for success in life:
      1.) Never tell everything you know.

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      • #4
        Thank you for your studied replies.
        I was not intimating that I would contemplate hiding assests, I was just curious to know what valuation would be acceptable to give to a trustee due to the varied and esoteric nature of some of my things.
        The most common advice heard here is "give a garage sale estimate"; this probably would not work in my case.
        I would be concerned that the trustee would think I was trying to deceive by giving a low estimate.
        An object of value would be worth no more that 50% of purchase price in any case.
        What does anyone think the best approach would be for a realistic valuation on higher price items?

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        • #5
          You seem knowledgable about the values involved.

          When people say "use garage sale values", or as my lawyer did "thrift shop values", what you need to think about is that the Trustee is looking at what can be realized after expenses of sale, and relatively quickly. So you might make your own best estimates based on what you know about the markets involved. You might build a spreadsheet listing "retail", "resale", "cost of sale" and "net". Put in conservative but defensible values and aggregate those numbers for your schedules. If you're questioned you can produce the worksheet to show you didn't leave things out or absurdly undervalue them.
          Chapter 7 Filed 8/11/2009, Discharged 11/23/2009

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          • #6
            Originally posted by URODOC View Post
            What does anyone think the best approach would be for a realistic valuation on higher price items?
            An attorney can advise you best as to what you can expect from (& how best to avoid issues with) your local trustees. I would have fine art and antiques professionally appraised and DIY your household furnishings.
            There are two secrets for success in life:
            1.) Never tell everything you know.

            Comment


            • #7
              Having represented several physicians I can tell you that a Trustee will look at your "lifestyle". Someone living in a million dollar home does not have $1500 in furnishings. Someone who drives a high end vehicle also usually has high end art, jewelry etc.

              The physicians I have represented either gave the Trustee everything or elected not to file a Chapter 7 - opting for a Chapter 11. One in particular, decided he/she needed to move on with life and turned over a 2nd home (had a good amount of equity), jewelry, artwork and a large tax refund. He/she simply did not care. The amount of debt that was being discharged was quite large therefore, in my client's mind, the loss of the assets to pay some debt was simply the cost of doing business.

              Oh, I forgot to mention. . . before we file such cases we have an appraiser go to the client's home. We used the appraiser the Trustee would use. The appraisal is then attached to Schedule B as an exhibit.

              Now, you mention taxes. Assuming the taxes are not dischargeable, having a Trustee liquidate assets will help you as the funds will be used 1st to pay the Trustee, 2nd to pay the Trustee's attorney and 3rd to pay priority creditors (back support, taxes) - so, depending upon your situation, a Chapter 7 may make good business sense.

              Des.
              Last edited by despritfreya; 01-01-2011, 06:51 PM. Reason: add comment

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              • #8
                You owe taxes, probably non-dischargeable. You WANT the trustee to come in an liquidate your estate to pay those. Reason being, if you let the IRS do it, they get EVERYTHING, the IRS is not limited by exemptions.

                Sound like you need to make the choice to get this behind you, or struggle with it for the next decade. It is up to you, but my take is; get a good (sorry to say, high priced) BK attorney and start sorting out your financial situation. If you start focusing on what is "really" important, (i.e. being able to have a life a after debt), the material items you mentioned become less important.

                Comment

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