Some people own property that cannot be protected in bankruptcy (non-exempt property). One option for property that is not exempt is the possibility of “buying back” non-exempt property from the trustee in a Chapter 7 bankruptcy. This is where the debtor has exempt funds available that can be used to “bid” on his own property because he wants to retain it. The trustee has an obligation to maximize the funds available to creditors in the case.

To buy back property, a debtor has to be willing to pay as much as the trustee can get from selling it on the open market. The debtor does not have the first right to buy or any rights to non-exempt property at all once a bankruptcy is filed. Non-exempt property is property of the estate. If exempt funds, such as from a 401(k) or help from a family member, are available, this might be possible. This is risky, though, since the debtor cannot be sure of how much he would have to pay to purchase the non-exempt property when the bankruptcy is filed.

Another possibility is to use a Chapter 13 bankruptcy and attempt a plan that pays the liquidation value of the non-exempt property through an increase in your payment plan in a Chapter 13 bankruptcy. In this context, liquidation value is the same amount that would be available in a Chapter 7 bankruptcy to the creditors if the trustee sold the property.

Consult with a bankruptcy attorney regarding exemptions and how filing bankruptcy might affect your ability to retain property. Each case is different. A knowledgeable bankruptcy attorney can evaluate your facts and help guide you in making a good decision regarding whether bankruptcy is the best choice for you. We are here to help if you would like our assistance.