Exemption Strategy

[BobMango]

Sorry in advance for the length.

Just looking for a little sanity check here. I'm getting ready to file for Chapter 7 in Washington state, pro se. Since I don't need the homestead exemption given the current value of my home versus the loan, I am electing to use the federal exemption schedule to take advantage of the unused homestead exemption wildcard that the federal exemption allows. Total wildcard available is $22,400 after doubling since it's a joint filing.

After throwing as much as I can into the various exemption categories, I still have about $28K in assets that I need to protect. These include a motorcycle ($10K), a VW Jetta ($5K), an F250 truck ($22K value, 13K loan so $6K in equity after auto exemption) and lastly some show cattle. The value on the cattle is about $15K, of which I can protect about $3K using the household goods exemption. After protecting my other assets I still have about $6K of the wildcard to place against the cattle.

Bottom line is that this leaves about $5.5K of cattle unprotected. I built a spreadsheet so that I can adjust the values and applied exemptions and it seems to me that leaving the cattle exposed provides the best odds against seizure. The asset is not very liquid and I assume that the trustee would not want to seize my cattle for $5K to give to creditors, knowing he'd have to give me almost $10K for the exemptions and feed and house the cattle until they get sold.

I'd welcome opinions on this. Also, would this be considered a no asset case? Or should I mark it as an asset case and let the trustee decide otherwise?

Thanks.

[justbroke]

This is definitely an asset case. First, I don't think you will get away with claiming that your show cattle are "animals"... "that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor". 11 USC 522 (d)(3) (Or, do you really believe and prove that they are pets first?)

I think your cattle are exposed. You may have other exemption issues. I would certainly file with an attorney because you have real assets, and I think you already have issues with those exemptions.

[BobMango]

Thanks justbroke, I think you're right all the way around.

I wonder if anyone has any experience turning over livestock? I'm thinking that exposing the least convenient asset is a fair gamble. If I can't legitimately protect them then I guess the trustee will do what he wants with them. I should get the cash for at least the wildcard exemption amount on them, even if the household exemption is disallowed.

I'll definitely consult an attorney, I have a consultation scheduled for this week.

[justbroke]

I wonder if anyone has any experience turning over livestock? I'm thinking that exposing the least convenient asset is a fair gamble. If I can't legitimately protect them then I guess the trustee will do what he wants with them. I should get the cash for at least the wildcard exemption amount on them, even if the household exemption is disallowed.

There are not too many Chapter 12 (Farm Bankruptcy) folks around here. At least I haven't heard of any. There are Trustees who deal with farm bankruptcies all the time and certainly with livestock. The Trustees are allowed to operate the "farm" business including feeding and taking care of the livestock until they can be sold.

As you mention, no one knows how much money can be had from selling the livestock. The Trustee usually likes "easy" sales. You could get lucky and the Trustee abandons the property, because it's too much trouble and risky for the Trustee.

I'll definitely consult an attorney, I have a consultation scheduled for this week.

A few consultations is the least you should do. At least get an idea of what your exposure could be.