Submitted by Jen Jones on Tue, 09/08/2009 - 10:50am
As you are getting ready to file for bankruptcy protection, one piece of information your attorney will request from you is a value of every item of property you own. Your attorney will want you to make a list of all the property you own and give an estimate of the fair market value. There's no need to worry about this part of the process; the request for valuation does not mean any of your property will actually be sold, most families don't own property worth more than the state exemption limits. Even if you have substantial property, it is still possible to protect the value above exemptions by filing for Chapter 13. To properly advise you on this issue, it is essential that your attorney know the fair market value of all of your property
The fair market value of a possession is the amount of money you would probably receive if you were to sell the item "as is" and relatively quickly. This means you don't factor in what it could cost with some repairs or touch-ups, what it cost when it was new or what it would cost to replace the item. This also does not mean the insured value of an item; again, remember that replacing an item and selling it at market value are two different undertakings. Instead of thinking about what you would pay to replace the identical item, or what you'd get from your insurance company, imagine a quick sale to the general public. How much money do you think you'd get for your item if you sold it at a garage sale or over Craig's List? This is a good way to estimate the fair market value of an item.
The fair market value of real estate can be estimated by thinking about how much you would be able to get for the real property--for example, your home--if you had to guarantee a sale in the next couple of months. Naturally, if you were really going to sell your place you would probably allow more time or invest in repairs to make the home more attractive to buyers, but that's not what fair market value means. Don't just provide the figure from a property tax assessor who may never have seen your home. If you're not sure about how to value your home, you may want to consult an experienced real estate agent familiar with your neighborhood, and one who will take into account a distressed sale scenario.
While you are making these calculations, use common sense to arrive at the likeliest amount for the market value. The garage sale method will work for a valuation of your Ikea furniture, but may not work for very pricey antiques more likely sold to professional dealers or major auction houses. Of course, it's not really usual for people filing for bankruptcy to have many such items, so you probably don't need to worry too much about this anyway.
As you can see, property valuation is nothing to worry about. Chances are you can get this part of your filing done easily, without too big of a headache. Keeping your attorney fully informed of the value and extent of your property is key to a successful bankruptcy.
From: The Law Offices of John T. Orcutt, with offices in Raleigh, Durham, Wilson and Fayetteville. Call +1-833-627-0115 to set up your free debt consultation.
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