When filing a bankruptcy petition, the debtor is required to value of all of their assets. The value should be based on the current fair market value of the asset. The debtor needs to use logic and fact when determining the value of the assets. While most debtors are not experts on the value of all the assets that they own, at the time of the bankruptcy filing, the debtor is in a unique position to make a fair estimate on the value of the asset. The debtor knows the current condition of the asset, what is wrong with it, how well it has been maintained when it was purchased, and for how much. Additionally, many debtors have recently tried to sell their assets before filing for bankruptcy, to avoid filing, and they know the market and asking price for the asset.
The creditors and the trustees have the option to challenge the value of the debtor’s assets. If there is a discrepancy in the value of the debtor’s assets, sometimes the creditor or the trustee and the debtor can reach an agreement on the value of the asset. The debtor would need to provide evidence to the objecting party on how they determined the value of the asset. Additionally, the debtor may be asked to provide oral testimony during the 341 meeting of creditors, on how the value of the asset was determined.
In the case where the value of the asset cannot be agreed upon, the court may hold an evidentiary hearing. The value of a debtor’s asset is a factual issue and the court cannot rule on a disputed fact without holding an evidentiary hearing.
Evidentiary hearings allow the parties involved in the disputed value of the asset to bring forth evidence of the value of the asset. At the Evidentiary Hearing, the parties produce whatever evidence necessary to prove or disprove the value of the asset. Evidentiary hearings can involve expert witnesses, other witnesses, contracts or other evidence necessary for a party to prove the factual dispute.
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Valuing assets in a bankruptcy can be an arduous task, but the debtor must spend due diligence on determining fair and accurate values for their assets. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
