When a debtor files for bankruptcy, a bankruptcy estate is created that includes all of the debtor's interests in property. The bankruptcy trustee is responsible for liquidating any valuable property (property not covered by exemptions) in the bankruptcy estate and distributing the proceeds to repay creditors. However, sometimes, property in the bankruptcy estate is abandoned by the bankruptcy trustee. Usually, property is abandoned when the property is of inconsequential value or the time and money needed to liquidate the property exceeds the actual value of the property.
If the debtor is in possession of the property, the property may be abandoned to the debtor; but if the creditor has a lien on the property that is greater than the value of the property the property may be abandoned to the lien holder. For example: If you have motor scooter worth $500 (with no lien on it), the bankruptcy trustee may abandon the motor scooter back to you because it would cost more money to liquidate that motor scooter than it is worth.
To find out more about how bankruptcy can protect your assets, contact
a Dallas-Fort Worth bankruptcy attorney today.