Can I Sell My Car After Filing Bankruptcy?

Posted by Wesley Scott on March 8, 2020 at 11:04 AM
Wesley Scott

Picture this: two weeks after you filed a chapter 7 bankruptcy you (finally) get an offer to purchase an older car you own that you’ve had on sales sites for a year.  There’s no loan against the car and the purchase offer – let’s say the offer is $3000 – is less than the maximum amount you can claim for equity in a motor vehicle.  And yes, you could use the cash.  So the question is, can you sell your car (or some other valuable personal property) while you are in your bankruptcy?

The answer depends on where you’re at in your bankruptcy timeline.  When you file a bankruptcy case, the filing creates a bankruptcy estate.  The estate is composed of all the property you own and all the property to which you are entitled.  And you, the bankruptcy debtor, are obligated to hold onto the property for administration by the bankruptcy trustee appointed on the case. 

The estate is composed of exempt (protected) and non-exempt assets.  When you file your case, you identify and value assets.  Then your attorney applies the appropriate exemption law to protect as many assets as the law allows.  In most cases in Minnesota, all of the assets you own are exempt.

But you and your attorney are not the only people in the process that have a say about exemptions.  The trustee in a bankruptcy case has the ability to object to a claimed exemption.  So if a trustee thinks an exemption used in your case is not correct, the trustee can object.  The trustee has to file an objection to an exemption within 30 days after you meet with the trustee.

If the trustee agrees that all your property is exempt, the trustee files a “no distribution report” with the court shortly after the meeting. It’s only after a no distribution report has been filed, or 31 days after the meeting with the trustee where no objection to exemption has been entered that it’s “safe” to sell that property.

These property issues can get complicated – all the more reason to speak with one of our attorneys at Kain & Scott to get excellent advice and representation on these issues!

CONCLUSION

When the time is right, or when you are ready, reach out to Minnesota’s HIGHEST GOOGLE REVIEWED bankruptcy law firm at www.kainscott.com. You will be so happy you did!

 

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