What Will Happen to My Household After the Event of Bankruptcy?
Many of our clients fear the seizure of their household effects in the event of bankruptcy. In particular, everyday objects such as laptops, cell phones, tablets, televisions, washing machines or kitchen utensils and pieces of furniture do not want to have to be given away under any circumstances.
Most of the time, however, a debtor’s worries are unfounded. As a rule, objects are only “at risk” if they are of particularly high value and their use is not absolutely necessary. In this article we will show you exactly what this means and for which items you may be concerned about it.
Ordinary household items cannot be seized (§ 811)
Section 811 of the American Code of Civil Procedure regulates which items are “non-attachable” before or during bankruptcy, i.e., which may remain in the debtor’s possession.
These are probably the most important regulations that the law takes into account. Everyday objects that serve an “appropriate, modest way of life and housekeeping” are absolutely non-attachable. The fact that a debtor has to endure a so-called “garnishment” is therefore ruled out. But what does this mean for items such as laptops, cell phones and tablets? Because it is often difficult to assess whether such an object is not after all too “expensive” to be considered unassailable.
Electronic devices and other valuables
The matter is a little more complicated with electronic devices. Because, as described in the above section, the cause must serve an appropriate and humble lifestyle. But is this still the case, for example, with a newer MacBook or the latest curved TV?
As a rule, there is no need to fear seizure here either. Because it takes into account that a computer, for example, is now part of such a way of life – unlike 20 or 30 years ago, when owning such a device was still an absolute luxury.
The items in detail:
Computers, laptops, cell phones and TV
In the case of computers, laptops and cell phones, it can usually be assumed that these will not be seized. This is mainly due to the fact that these are “part of” a normal way of life these days and apart from that, they usually lose their value very quickly. The bankruptcy administrator is, therefore, not doing himself a favor by seizing such items, since an auction hardly brings any financial advantage. Bankruptcy attorney is the one who knows how to handle this situation by filing a stay order or use other tactics. However, seizing electronic devices is applicable in rare case.
The same strategy is likely to apply to all electronic devices, including televisions and cell phones. It has to be an astronomically expensive and particularly unusual electronic device in order to be feared of seizure. The number of devices that could even be considered for this is very manageable.
In the next section, we will show you when electronic devices can exceptionally be seized:
When electronic devices can be seized
An exception to the non-seizure can only apply if the value of the respective item clearly represents a luxury good. This is e.g. This is the case, for example, with particularly expensive devices, i.e., those that are “ahead of their time”. In exceptional cases, attachment can also be made if the device is a second device and therefore does not necessarily have to be left with the debtor. However, this does not apply if the device is required for professional activities, e.g., for designers, sound engineers or e-athletes.
While there are exceptions in theory, in practice it is extremely seldom considered to seize such items. Far too rarely are these actually profitable for the bankruptcy administrator. So most of the time people don’t ask about it in the first place.
Other items, on the other hand, are particularly often seized.
These items can be seized
Most of the time, vehicles, real estate and inheritances in particular are seized. These are always profitable and usually the first point of reference for the bankruptcy administrator. A seizure must also be assumed for jewelry (unless wedding rings), expensive carpets or valuable paintings.
However, since such objects are usually no longer owned by a debtor threatened with bankruptcy, many bankruptcy administrators do not even come to a “home visit”. As a rule, the fear of unexpected seizures is therefore unfounded.
Possibility of exchange attachment (§ 811a)
However, even if an object can be seized there is the option of allowing the debtor to exchange it. According to § 811a, the bankruptcy administrator can leave an exchange item of lesser value with the debtor when an item is seized according to § 811. Alternatively, the bankruptcy administrator pays the amount of money required to purchase a lower-quality comparative item.
How to recognize loan sharks?
Many debtors turn to a lender first when faced with a financial crisis. Usually a negative entry prevents you from rescheduling with the help of a well-known bank – instead, loan brokers and offers from the Internet are the only supposed solution. Our clients keep telling us about such previous histories before they finally went to our advice center and settled their debts with us.
The background to this is that with such loans one often falls into the clutches of “loan sharks”, i.e., lenders who worsen the situation of the debtor further through unfair provisions “in the small print” and hidden costs.
Features of a loan shark
Many lenders advertise that customers can get a loan without prior query or on particularly favorable terms. In this case, however, special care is required because:
The U.S banks are fundamentally obliged to inquire about the creditworthiness of customers at an early stage. This is to protect people from over-indebtedness. In addition, such offers usually only lead to credit brokers – and not to lenders. These act without the approval of the banking supervisory authority. Rather, they see themselves as a profit-oriented company and less as a bank. So it’s only about maximizing the profit of the loan shark – and not about responsible financial support. We strongly advise against loans without a previous check.
Usually an out-of-court debt settlement with the creditors or bankruptcy proceedings (despite its bad reputation) is the more pleasant way. In order to give debtors an initial orientation in their difficult situation, our legal debtor advice is free of charge on the first telephone call. This gives you an honest and objective overview of your options. You alone decide which measure to follow.