Clients Over-value Their Household Furniture: Appraisal Required To ...

Florida’s Chapter 7 bankruptcy debtors may exempt $1,000 of personal property per debtor, and if not claiming homestead exemption, an additional $4,000. The value of personal property for bankruptcy purposes is based on flea market, garage sale, or liquidation value. Bankruptcy attorneys rely upon their clients to list and value their property. Most bankruptcy attorneys will not visit their clients’ homes to inspect property, and most attorneys are not valuation expert. What can you expect your attorney to do if you submit inflated personal property values which exceed exemption limits
Consider, for example, one of my recent Chapter 7 debtors who submitted a list of furniture, cloths, and other personal property valued over $8,000. My paralegal explained to this debtor that his values exceeded the upper range of typical property values for people with his income and his house size. We explained three or four times the concept of “flea market values”, and we suggested having his personal property appraised. The client insisted his property was worth the $8,000 he stated on his paperwork. We filed the bankruptcy listing personal property of $8,000 knowing that it was going to be an issue.
Fortunately, the bankruptcy trustee was fair and understanding.

The trustee at the creditor meeting explained the debtor’s problem and strongly encouraged an appraisal. The client finally got the point and ordered an appraisal from the trustee’s recommended appraiser. The appraisal came back under $2,000 and all property was exempt. All was well that ended well.
Your bankruptcy attorney is in a difficult position when he is asked to file a petition with unrealistic property values. It is the same issue if the debtor’s valuation is inflated or if the debtor has undervalued property which values may invite trustee scrutiny. Your attorney should not file petitions which he actually knows is factually incorrect- such as, a petition which the attorney knows omits assets or important information. On the other hand, the attorney relies upon his client to furnish complete and accurate information.
In the end, the client is responsible for his own bankruptcy, just like the client is responsible for his own tax return prepared by a CPA. The attorney should explain to you applicable bankruptcy law and try to guide you toward filing your bankruptcy petition. Bankruptcy debtors should carefully listen to and follow their attorneys advice- especially if the advice is repeated two or three times.

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