There was an interesting bankruptcy case where a debtor failed to wholly protect the value of her home because she erroneously claimed only $21,000 on her homestead exemption when the equity of the home was actually worth $50,000. When the debtor discovered the error she attempted to claim the "property's entire value" saying that the bankruptcy trustee failed to object to her exemption.
Here are the details of the case:
A homeowner who claimed a $21,000 homestead ex¬emption in a house that she said was worth $21,000 was entitled to protect $21,000 in equity of a home that turned out to be worth $50,000. Judge Patrick M. Flatley said the debtor could amend her exemption to claim the entire amount of the homestead exemption allowed under West Virginia law, but she could not use the trustee's failure to object to her exemption as a basis for protecting the property's entire value. (In re Mitchel, No. 06-144 (Bankr. N.D. W.Va. 01/28/09).)
Also the bankruptcy case said:
The trustee countered that he had no reason to object to the debtor's homestead exemption because it was in an amount less than the maximum allowed by law.
In other words a bankruptcy trustee is not likely to point out mistakes a debtor makes that disadvantage him/her. In this case, if the debtor did not discover her error the bankruptcy trustee might have had access to more cash to repay unsecured creditors. This is why a debtor filing for bankruptcy must work closely with a bankruptcy attorney to assure that assets are valued correctly and that all exemptions available are taken.
A bankruptcy trustee will not guide a debtor through this process by "teaching" him/her about these exemptions. The debtor and his/her attorney is responsible for knowing which exemptions (and how much) they can take. Filing for bankruptcy is a detailed process with many rules that can trip up debtors if they are not working with an experienced bankruptcy attorney.