Pro Se Chapter 7 Debtor Risks Loss of Vehicle and Hostile Trustee – Is There a Solution?

19 Aug Pro Se Chapter 7 Debtor Risks Loss of Vehicle and Hostile Trustee – Is There a Solution?

Here is a question I received from an individual who filed a Chapter 7 case pro se (without a lawyer) and now has an asset problem with his Chapter 7 trustee:

I filed chapter 7 and had a vehicle that i stilled owed money on and I continued to pay it off, it was listed in my original filed papers as exempt. I received a letter from the trustee about 3 weeks after the vehicle was paid off saying that i had too much equity in it so they demanded that I hand it over. I called and called and left many messages at the trustees office, I finally faxed them the location of the vehicle, it was not working and I had it at a local repair shop. I still didn’t hear anything.

My case has since been discharged and there was a final day for a govenrment unit to file a claim. This date has also come and gone. What am I supposed to do now? The trustee has not responded , even though I have tried and tried to contact her. Do I have the right to keep my car now since all my paperwork lists it as exempt? Can she still come after it whenever she feels like doing a days work? No one has been able to tell me. Please help.

Here is my response: The immediate issue here relates to the equity you have in your vehicle. One of the main jobs of the Chapter 7 trustee is to find non-exempt assets that she can sell. In Georgia, where you live, an individual filing bankruptcy can shelter or “exempt” up to $3,500 of equity in a motor vehicle. In addition to the $3,500, you can take up to half of your unused real estate exemption. In Georgia, you have a $10,000 real estate exemption. You can therefore take half – $5,000 – and apply to your motor vehicle exemption. Assuming no real estate or other use of your “wildcard” exemption, you can shelter up to $8,500 of equity in your motor vehicle. [Note to non-Georgia readers: If you live or file outside of Georgia, check with your local bankruptcy counsel for more information about the exemptions that apply where you will be filing.]

Often, when I look at pro se filings, I note that the pro se debtor did not claim all of the exemption to which he or she was entitled. So, I would look at Schedules B and C and confirm that you did, in fact, claim all of the available exemption.

I also think that debtors sometimes overvalue their vehicles. My practice is to advise my clients to take their vehicles to a place like CarMax to get a written offer to buy. In my view a CarMax offer is equal or superior to a NADA valuation since the CarMax offer represents an actual offer to buy a specific vehicle.

If you have gone through this analysis and it still appears that you have, for example, $4,000 to $5,000 of non-exempt equity in your vehicle, you can make an offer to buy the trustee out of the estate’s interest. If the trustee is not responding to you, it would make sense to hire a lawyer for this task.

Needless to say, this type of situation is a good example of why it makes sense to use a lawyer to begin with. At the outset of Chapter 7 cases, the trustee will classify your case as either an “asset” case or a “no asset” case. Chapter 7 trustees get a flat fee for “no asset” cases – less than $100 per case. In asset cases, however, the trustee can hire his or her own law firm to represent the trustee and bill at his or her regular hourly rate, which may be $300 or more per hour.

My point here is that once a case has been designated as an “asset” case, the trustee has a vested interest in finding assets. This is why your exemptions should be set out correctly from the beginning. In this case you are faced with the task of convincing the trustee to forego a payday.

In my view you need the advice of counsel to work through this situation, to amend your schedules as appropriate and to negotiate a settlement with your Chapter 7 trustee.

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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.
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