Gumshoe? What does that have to do with bankruptcy?

To file a bankruptcy in chapter 7 or chapter 13 you
must be an investigator or a bit of a sleuth!

Asset Values

You have to dig into and explore the value of your assets. It will take some looking to figure out what that stamp or baseball card collection is worth. It’s not just the catalog value (which is easy enough to find) but the value is what you could sell them for at the time you file the bankruptcy case. You’ll have to look at what similar items sold for at auction or what the dealer will pay you for them. This will usually be far less than any listed catalog values.

You might have to search online at eBay or Craigslist. These are both good sources for musical instruments and your electronics such as a computer or television. Make sure you use the year, make, model number and specs when comparing items. Also see what the items have sold for on eBay not just the starting auction prices or the buy it now price. Items are often listed high to see what the buyer might be able to sell it for. What the item is actually sold for is a far more accurate valuation and is generally less than a listing price. 

Sometimes people think that if it is a new unused item, the value must be what they paid for it. Rarely ever is that the case. In fact, I have never seen that to be so. Values these days are on the decline and just taking something home causes a minimum of 50% depreciation off that initial sales cost.

$55,000 valuation with actual fair market value of $1,200

One of my clients had an extensive stamp collection which he valued using catalogs. His valuation was $55,000 which I seriously questioned. This was not something that I could protect for him and I had him take the collection into a shop where they bought and sold such items to confirm that it really was an issue. It turned out that the real world value was just $1,200. There was  a high sentimental value and a low dollar value which worked out well for the case. 

I also know of someone who purchased an expensive set of real silverware that was still in the shrink-wrapped box. They insisted the value was at least $10,000 and they were concerned about getting a bankruptcy exemption for it. I insisted they look more into the value and see what they could actually sell the set for. The amount it could be liquidated for was only $1,500 and I had no trouble protecting it under the circumstances of the case.

Debts and Liabilities

You also need to investigate all your liabilities and become a Gumshoe. Sometimes you need to call for a payoff value (auto and home loans) and other times you need to investigate the mailing address. If you are filing for a bankruptcy you’ll need to list the correspondence address or a bankruptcy notice address — not the payment mailing address. Often there are addresses in the small print on the back side of your statements and it’s not always easy to locate these addresses. If you run your credit report the listed address is usually not correct but may be. You can generally locate the appropriate  correspondence address on the statement, sometimes on the front and often in small text on the back.

Be Careful of Assumptions and Do Your Digging

The take away here is do your research and don’t make assumptions. Don’t assume the value has any relationship to what you paid for the item. Do look into it and investigate the value. With the internet and available options anything can be valued. Also make sure you have the correct notice addresses for your creditors.

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Image Credit: Leo Reynolds.