Bankruptcy Tip: Don't Over or Undervalue Your Assets – What's Your Stuff Worth?


One of the most important aspects of your bankruptcy is how much you own in assets. Some assets like your car or home may have a debt attached to them so these are valued at the fair market value of the asset less the amount of debt attached (this is called equity). But you also have to list your other assets including your household goods, clothing, electronics, artwork, jewelry, computers and pretty much anything you own. This can be tricky.

What can happen if you under or overvalue your assets
If you deliberately undervalue your assets (or do so unintentionally), your case can be kicked and you can be accused of fraud. If you unintentionally overvalue your assets, you can get your case kicked because it can appear that you have enough assets to sell off to pay your debts. In the end, what you should do is to assess the value of your assets as accurately as possible.
North Carolina bankruptcy exemptions allow you to protect certain dollar amounts of assets which is enough for most people, but if you're close to the exemption limits, accurate assessment can be the difference between getting relief and your petition for Chapter 7 relief denied. Here's some broad a couple of broad guidelines on asset valuation that should be acceptable to the court.

Appraised Value
For most household goods, electronics and clothing, getting an appraisal is not necessary. But for jewelry, furs, artwork, antiques or collectibles (like Hummel figurines), a professional appraisal is wise. Be sure to specify to the appraiser that you want to know how much the item would sell for on the current market rather than an appraisal for insurance purposes. Insurance appraisals will often come in higher and may not be as accurate. Reputable antiques dealers, estate representatives and jewelers are likely good sources of fair appraisals.

Replacement Value
For most other kinds of property, replacement value is accurate enough for bankruptcy court purposes. Replacement value is not what it would cost you to buy a brand new version of your item, but what it would cost to buy one just like what you own. For instance, if you own a big screen TV you brought five years ago for $2,000, that TV is no longer worth two grand. Instead, it's worth what you could buy a five year old TV for on Craigslist or at Goodwill. Your clothes, unless they are famous designer gowns, are only worth a few bucks. Furniture is what you could buy or sell it for on Craigslist.

Filling out Schedule B
When your bankruptcy petition is filed, there are several petitions that go along with it. Personal property is filed on Schedule B and includes cash you have on hand, in the bank, your household goods, furniture, computers, clothes, furs and jewelry, guns and hobby equipment, cars, boats, machinery and all other items of this ilk except for real property (house or land). It's imperative that this form be filled out accurately with your assets valued as accurately as possible. If you're trying to file pro se (without an attorney), this can be a challenge. This will be much simpler if you're working with a reputable bankruptcy attorney.
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