What rights , if any, does someone have the moment they file?

[bornfree2]

Okay, ill just have to keep super diligent about every single expense post filing. I dont plan on buying a new car (its unbelievable how much they cost), just want to stay housed, get income, and get my fresh start. Never will i apply for a credit card ... im sure everyone says that lol but after living in absolute austerity for 5 years, im pretty good at living on beans and rice.

[justbroke]

Okay i see your points. So that 60 day period is very very sensitive. Wow.

It's probably a minimum of 60 days since it is tied to the "concluded" 341-Meeting. Not all 341-meetings are concluded at the first scheduled session. That's why it's tied to the concluded meeting as the schedules are likely changed from the time of the first-scheduled 341 meeting until that meeting is considered concluded.

But something like cash cant be 'sold' or 'appraised' . Is that treated differently?

You have to think about a Chapter 7 bankruptcy as a liquidation. Liquidation is converting property from the physical into cash (or a cash equivalent). Cash is already in a "liquid" state (e.g. a liquid asset) and its value is pretty easy to determine (face value). Generally debtors are allowed to use cash in order to continue contemporary exchange for a service (cash for food). Generally, debtors shouldn't buy property just after filing any bankruptcy.

With a huge wild card exemption in california, why not throw just everything in cash, claim it exempt, and spend on absolutely necessary things and hope it survives the 60 day- 1 year pressure can period

If you have no income, and only have liquid assets in cash deposits, exempting it would be the thing to do. The court doesn't look at you sideways for spending money to live. But, if you can't exempt the cash... you can't spend the cash. But don't go out and buy a new car the day after you file, or do other things that show that you don't deserve a discharge.

I dont see what right/ authority the Trustee has to 'give you the exempted value' if its already given by law. Again Im sure im all wrong, and i will dig deeper into this esp to try to find practical strategies to pay my rent and this car expense in march!

The right comes from the law. It literally places the trustee into the shoes of the debtor. The trustee can do anything that the debtor could have done which includes... selling his/her own property. Trustees also have strong-arm powers which allow them to undue bad deals, fraudulent transfers, and improper perfection of liens.

If property is partially exempt. For example, you own a car free-and-clear and it's worth $10,000. However you only have a $4,000 exemption so the vehicle is only partially exempt. The trustee can -- and will -- sell the vehicle and then give you $4,000. So long as the Trustee gives you the value of the exemption, they can liquidate.

A smart trustee won't try to liquidate something where they can't get the value. A couple of them thought they could make money on something and ended up losing money because they still had to give the debtor the exemption value.

[bornfree2]

Okay i see your points. So that 60 day period is very very sensitive. Wow.

But something like cash cant be 'sold' or 'appraised' . Is that treated differently? With a huge wild card exemption in california, why not throw just everything in cash, claim it exempt, and spend on absolutely necessary things and hope it survives the 60 day- 1 year pressure can period

Think of exemption as precluding the bankruptcy estate -- the trustee -- from selling the property unless the estate gives you the exempted value of the property.

I dont see what right/ authority the Trustee has to 'give you the exempted value' if its already given by law. Again Im sure im all wrong, and i will dig deeper into this esp to try to find practical strategies to pay my rent and this car expense in march!

[justbroke]

So my reading of the law (and i dont have it in front of me) is any exempted property IS exempt until the trustee files a claim for it (or objection or whatever the specific motion is). And that then triggers a notice and then a hearing. aka due process. I will research it further and get back.

The property is tentatively exempt. The Trustee can object to that exemption. That generally is done within about 10 days of the 341-meeting, but the trustee has up to 30 days after the first "concluded" 341-Meeting. (Concluded 341 meeting is differentiated from first "scheduled" 341 meeting.) That's why even though it's exempt, you can't just sell it. Again, the Trustee has about 30-days after the (concluded) 341-meeting which means at least 60 days has elapsed since the filing date. There are also other specific things when there is fraud (allowing objection up to 1 year after the case is actually closed).

Think of exemption as precluding the bankruptcy estate -- the trustee -- from selling the property unless the estate gives you the exempted value of the property.

I can not see how a person without any income can survive 60+ days in limbo land. I may (probably am!) be wrong but I will research the law

If they had no money before the 60-days... then they would have none after the 60 days. You can't sell property of the bankruptcy estate without approval. Unless and until the Chapter 7 Panel Trustee abandons the property or files their report (or what property they want to administer), it remains property of the bankruptcy estate until the earlier of dismissal, discharge, or the explicit abandonment.

In essense, there is exempt and non exempt property. Trustees only work with non-exempt property unless they make a move to try to convert an exempt to non-exempt status via the objection process

Not quite. Trustees work with all property of the estate. They can administer partially exempt property, which happens more often than you would imagine. The property is still property of the bankruptcy estate even if exempt. It's just exempted from liquidation to pay the creditors. Ownership of the property remain with the bankruptcy estate until the earlier of dismissal, discharge, abandonment, and/or close.

[bornfree2]

Furthermore California had passed a law last year that allowed a bank account to be exempt from judgements (?) if it had amounts necessary for basic living ... something like $1600 based on poverty limits and household size etc. (horribly misquoting it but thats the gist). So perhaps the wiser move would be to have more in the bank than in cash for that legal protection

Lastly, this link also shares my thinking

https://www.alllaw.com/articles/nolo...-property.html

In essense, there is exempt and non exempt property. Trustees only work with non-exempt property unless they make a move to try to convert an exempt to non-exempt status via the objection process

[bornfree2]

here is the law where i got my understanding from

https://www.law.cornell.edu/rules/frbp/rule_4003

Rule 4003. Exemptions

Primary tabs


(a) Claim of Exemptions. A debtor shall list the property claimed as exempt under §522 of the Code on the schedule of assets required to be filed by Rule 1007. If the debtor fails to claim exemptions or file the schedule within the time specified in Rule 1007, a dependent of the debtor may file the list within 30 days thereafter.

(b) Objecting to a Claim of Exemptions.

(1) Except as provided in paragraphs (2) and (3), a party in interest may file an objection to the list of property claimed as exempt within 30 days after the meeting of creditors held under §341(a) is concluded or within 30 days after any amendment to the list or supplemental schedules is filed, whichever is later. The court may, for cause, extend the time for filing objections if, before the time to object expires, a party in interest files a request for an extension.

(2) The trustee may file an objection to a claim of exemption at any time prior to one year after the closing of the case if the debtor fraudulently asserted the claim of exemption. The trustee shall deliver or mail the objection to the debtor and the debtor's attorney, and to any person filing the list of exempt property and that person's attorney.

(3) An objection to a claim of exemption based on §522(q) shall be filed before the closing of the case. If an exemption is first claimed after a case is reopened, an objection shall be filed before the reopened case is closed.

(4) A copy of any objection shall be delivered or mailed to the trustee, the debtor and the debtor's attorney, and the person filing the list and that person's attorney.

(c) Burden of Proof. In any hearing under this rule, the objecting party has the burden of proving that the exemptions are not properly claimed. After hearing on notice, the court shall determine the issues presented by the objections.

I will go down the rabbit hole on how this has been interpreted but the naive me says its exempt by fact that its claimed, until its objected to..and that objection has to be a legal procedure and brought before a judge

Which makes sense otherwise the Trustee and Creditors would have supreme power and there would be no checks and balances

[bornfree2]

None. The property belongs to the bankruptcy estate which is created the second that you file. You may claim property as exempt, but until the Trustee abandons the property or the discharge is entered (and in some cases the case is actually closed), the property remains property of the bankruptcy estate. You can only sell property of the bankruptcy estate if you seek permission from the court.

So my reading of the law (and i dont have it in front of me) is any exempted property IS exempt until the trustee files a claim for it (or objection or whatever the specific motion is). And that then triggers a notice and then a hearing. aka due process. I will research it further and get back.

I can not see how a person without any income can survive 60+ days in limbo land. I may (probably am!) be wrong but I will research the law

[justbroke]

Once someone files, what rights over their property do they have? I understand that the trustee assumes ownership over everything, and that the debtor can claim property via exemptions.

None. The property belongs to the bankruptcy estate which is created the second that you file. You may claim property as exempt, but until the Trustee abandons the property or the discharge is entered (and in some cases the case is actually closed), the property remains property of the bankruptcy estate. You can only sell property of the bankruptcy estate if you seek permission from the court.

But how does day to day living occur after filing? Can you still use your debit card? Can you sell items on ebay to raise cash (that is items that are exempted)

For Chapter 7, the bankruptcy estate is everything you had as of the date you filed. There are some special exceptions considerations for inheritances, property acquired due to a dissolution of marriage, and some other things related to property bequeathed. Other than those special exceptions, you could win the lottery the day after you filed. That money would not be property of the bankruptcy estate. (But, winning the lottery right after filing would likely raise a "totality of circumstances" situation.)

It appears as if everything is just frozen for as long as the case can take? So how do they expect people to handle life emergencies in the meantime?

As stated, it's as of the filing of the case for a Chapter 7. (Chapter 13s have some special consideration so I'm only talking to a Chapter 7). For a Chapter 7 you continue to live, so long as you don't use or transfer property of the bankruptcy estate. For example, if you filed Chapter 7, the paycheck you receive after filing is not property of the bankruptcy estate. In every case that I know, any other money that you actually exempted could be used to continue to live. The real issue with property in a Chapter 7 is more tangible property like cars, homes, land, and other physical property.

Just found out my car needs smog check, it failed, and now im looking at unexpected fixes that will require selling something (anything). If the car becomes trustee property, how will I be expected to bring it to standard?

You are not expected to bring it to standard. Most people exempt their vehicle since it's usually something they need in order to earn money and live. If you need to fix the car and you intend to keep the car (statement of financial intentions), then continue to make repairs and use the vehicle.

[bornfree2]

Once someone files, what rights over their property do they have? I understand that the trustee assumes ownership over everything, and that the debtor can claim property via exemptions. But how does day to day living occur after filing? Can you still use your debit card? Can you sell items on ebay to raise cash (that is items that are exempted)

It appears as if everything is just frozen for as long as the case can take? So how do they expect people to handle life emergencies in the meantime? Just found out my car needs smog check, it failed, and now im looking at unexpected fixes that will require selling something (anything). If the car becomes trustee property, how will I be expected to bring it to standard?