Your Creditors Don't Want Your Stuff

Clients get nervous when I ask them how much their personal things are worth.  We list the value of clothing, dishes, furniture, toys... even the value of the family pet.  Some clients believe this means they'll have to sell these things if they file for bankruptcy, or that there is some chance they'll lose this property.

In fact, the creditors (represented by the Trustee in a bankruptcy) don't want your personal property. They want money, and most peronal property has very little liquidation value.  How much would you get for your things if they were sold at a garage sale?  Or if you had to buy a similar piece of property in like condition? Probably not very much.  I find most families have between $1,500.00 and $5,000.00 of personal property, with very few, if any, items worth over $550.

Combine this with the fact that you get to keep the following under the federal exemptions:

The debtor’s interest, not to exceed $550 in value in any particular item or $11,525 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

In other words, you can keep up to $11,525.00 in the above items.  And for couples this amount is doubled.

Creditors focus more on things with actual resale value: home equity, equity in boats/motors, savings, and business interests.