What Happens If a Trustee Objects to a Bankruptcy Exemption?

Related Ads

Bankruptcy exemption rules allow the debtor to retain certain exempt assets in a Chapter 7 proceeding. Bankruptcy exemption rules are governed by state law.

Exemptions

A Chapter 7 proceeding is often referred to as a liquidation proceeding. The bankruptcy trustee takes over all non-exempt assets of the debtor and liquidates them to pay off the creditors. When a debtor files a Chapter 7 bankruptcy proceeding, he or she must submit a list of the assets he or she claims to be exempt. Generally a debtor can claim exemption on his or her home, car, tools of trade, clothing, etc. The bankruptcy trustee has 30 days from the date of the creditors meeting to object to any of the exemptions listed by the debtor. If the trustee fails to object to any of the exemptions listed by the debtor, then the listed assets will be exempt in bankruptcy and will not be part of the bankruptcy estate.

Objections

If the bankruptcy trustee objects within 30 days from the date of the creditors meeting, then the court will fix a date for hearing to determine whether you are entitled to the exemption which the trustee has objected to. The trustee will object to an exemption if the objection benefits the estate. The trustee will also object to an exemption claimed under the wrong section of law especially if allowing the improperly claimed exemption would remove assets from the estate that should be available for payment to creditors of the debtor.

Dealing with Trustee Objections

When a trustee objects to an exemption, the trustee has the burden of proving that the exemptions are not properly claimed. However it is important that you respond to the objections. You must file your objections in the bankruptcy court. In your response, you must show that the exemptions have been rightly claimed. During the hearing, the trustee will present its case. You must then present your case. You may call for witnesses. Once the hearing is complete, the court will decide whether to allow the exemption as claimed or deny the exemption based on the trustee’s objections.

Getting Legal Help

Chapter 7 bankruptcy exemptions are meant to protect the debtor from complete deprivation of any means of survival. Bankruptcy is meant to give the debtor a fresh start in life. Bankruptcy exemptions help serve this purpose. Consult with an experienced bankruptcy attorney if you intend filing for bankruptcy. The attorney can assist you deal with the trustee’s objections to your claimed exemptions.

NOLODRUPAL-web1:DRU1.6.12.2.20161011.41205