Can My Bankruptcy Trustee Visit My Home to ‘Take Inventory’?

trustee

A common concern for anyone filing for bankruptcy is exactly how much “power” the bankruptcy trustee holds, and whether s/he is working for the debtor or for the creditors. In order to discuss this in depth, we first need to review some trustee basics.

In a Chapter 7 bankruptcy proceeding, a trustee is assigned to each case. The trustee’s main purpose is to oversee all of the assets that the debtor owns. An asset is defined as “property owned by a person or company that has monetary value and is available to meet debts owed.”

A trustee is appointed to a bankruptcy case as an impartial administrator of sorts. S/he has no personal interest in the case and can therefore oversee all of the financial information without prejudice. You cannot hire your own trustee, and your bankruptcy attorney cannot take on the role of trustee due to the conflict of interest. The bankruptcy court will typically select a local attorney with extensive bankruptcy experience to act as trustee.

Any and all documents containing information about your debts, assets, income, and the general state of your financial affairs will be reviewed by your trustee in order to verify all of the claims you made on your bankruptcy petition. Once s/he has a good handle on the details of your case, the trustee’s main job is to determine if you have any nonexempt assets.

Chapter 7 debtors are permitted to keep certain protected assets/property. These are known as exempt assets, and they cannot be sold or liquidated to repay your creditors. Nonexempt assets, on the other hand, are assets whose value exceeds the amount you are allowed to keep. It’s the trustee’s job to ascertain whether or not you have any nonexempt assets. If you do have some nonexempt assets, the trustee must establish the monetary value of said assets so that they can be sold (liquidated). The money that is made from liquidating your nonexempt assets will be used by the trustee to pay all of your creditors equally. For example, if it happens that you have $20,000 worth of nonexempt assets (jewelry, collectibles, etc) and five creditors, the trustee will sell the items and distribute $4,000 to each of your creditors.

While this may only make a small dent in the total amount of money owed to your creditors, the liquidation of nonexempt assets is in place so that your creditors can at least receive some repayment of the money you borrowed.

In order to determine the value of any nonexempt assets, the trustee does have permission to visit you at your home, and this knowledge can be stressful. However, in reality, trustees rarely ever visit a debtor’s home in order to “take inventory” of your nonexempt assets. If your trustee does come to your home, it will typically be at an agreed upon time to collect any nonexempt assets listed in your bankruptcy petition so that they can be sold. It is extremely rare for a trustee to ask to come inside your home to “have a look around.”

If your trustee does happen to show up at your door one day without warning, you can let him or her know that you weren’t expecting the visit, and you’d like to speak to your attorney before granting the trustee access to your property. If the trustee insists on inventorying your assets, reschedule the visit and make sure that your attorney will be present at the rescheduled appointment.

Image credit: Jonathan Mueller

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One Response to Can My Bankruptcy Trustee Visit My Home to ‘Take Inventory’?

  1. Pingback: Why did the Trustee Object to My Bankruptcy Discharge? | Veitengruber Law

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