My case is a Chapter 7 asset case but I don’t want to lose my property
What happens when you realize after filing that you are not prepared to parts ways with an asset that must be liquidated by the Chapter 7 trustee?
As I said, you must cooperate with the Chapter 7 trustee once filed. And in the event the trustee determines you have assets that must be liquidated to pay your debts, you must cooperate in the liquidation process. But sometimes hearts and minds change when the bankruptcy case moves forward. For instance, lets says there is a family heirloom classic car that has a value of $10,000 that for various reasons is the only asset the trustee wants to sell and there is no way to protect the vehicle through an exemption.
What can be done?
There are typically two choices here:
1. Your attorney can try to negotiate with the trustee for a cash payment from you in lieu of selling the vehicle. Perhaps the trustee would accept $8,500 cash rather than the sale of the car. If this deal can be worked out, then you should present the money to the trustee to resolve the case. Of course, this begs the question, where does the $8,500 come from? This is the challenge for these situations. If you can’t get a friend or family member to lend or give you the funds, often times this option is not available for Debtors. Other times, the trustee may allow you to make payments over a short period of time (in Oregon typically 10-12 months or less), although this is not always the case. For instance, if your bankruptcy documents do not provide enough income to make the payments, this option will not work.
2. If you cannot work out a deal with the trustee, the other option is to convert to a Chapter 13 case, which allows you to keep all of your assets in exchange for a long term monthly payment to the bankruptcy court’s Chapter 13 trustee.