During chapter 7 bankruptcy proceedings, the filer’s property is put into what is known as the bankruptcy estate. A bankruptcy trustee is then put in charge of this estate to determine what can be sold to pay back the filer’s debts. Most property can be held onto by filers through the use of exceptions. However, even for property that is not exempt, there may be a way for filers to hold onto it after bankruptcy.
The bankruptcy court allows filers to hold onto much of their personal property through the use of exemptions. These exemptions are offered as a way to allow individuals to maintain some of their personal property after bankruptcy, giving them a foothold for starting over. Unfortunately, not all personal property can be exempt. When a bankruptcy filer’s personal property is turned over to the bankruptcy trustee, they may be able to get it back if the bankruptcy trustee chooses to abandon the property.
A bankruptcy trustee may choose to abandon a filer’s property if they believe the property in question is not valuable enough for the estate to benefit from its sale. A bankruptcy trustee may also choose to abandon property if liquidating and distributing its proceeds is deemed too burdensome a task.
When property is abandoned by the bankruptcy trustee, it typically is not considered abandoned until the bankruptcy has been discharged. Once the property is abandoned, filers may request that it be returned to them. Although rules regarding abandoned property vary from state to state, working with an experienced bankruptcy attorney can help filers understand property abandonment and how to go about receiving this property back.