Can I Sell Assets In Chapter 13?
In a Chapter 7 bankruptcy case, the trustee is responsible for liquidating assets for the benefit of creditors - all the debtor has to do if they don't have the cash to "re-purchase" a particular asset (or simply don't want to re-purchase it) is to hand the asset over to the trustee and wash their hands clean of it.
In a Chapter 13 case, however, the trustee does not perform this role, so the debtor does not have this option. It is the debtor's responsibility to turn assets into cash if needed in order to pay the minimum amount that it is determined their creditors must receive during the case.
So what happens if the debtor does not have the cash available to pay the required amount to the trustee, but at the same time is unable to sell the asset(s)? My clients have been running into this problem increasingly often these days, particularly with real estate due to the downturn in the market. So what is the solution?
The best option to get rid of unwanted assets might very well be to auction them. An independent auctioneer can be hired by the debtor, and then an agreement worked out with the trustee (with the creditors given an opportunity to object) as to what a fair auction price would be. This has been a very successful strategy in cases where the debtor would otherwise be left with the impossible position of either coming up with the cash equal to the value of the property, or having their bankruptcy case get dismissed.
This blog was written by Holly McFall, Esq. of The Dellutri Law Group, P.A.. Ms. McFall defends homeowner in the foreclosure process and in the Bankruptcy Court.
