The Trustee and/or Creditors disputed the Claimed Exemption in Bankruptcy


After the creditors meeting, the consumer must make sure that the trustee did close the meeting officially. The importance of which is that the trustee and creditors have only 30 days to challenge the consumers exemption claims. Imagine if the consumer fails to check the court files about the supposed adjourned meeting, the trustee and the creditors would have plenty of time to challenge the consumers’ exemption claims.


What are the trustee and creditors objecting to?

• The consumer is not eligible to use the state exemptions. Under the new bankruptcy law, the consumer can only state that he/she is domiciled in the property if he/she actually lived there for at least two years. If not, the consumer must declare the residence that he/she stayed in for the greater part of the 180 days before he/she filed bankruptcy.

• The claimed item is not included in the state exemption list. The exemption list working tools under the “goods and chattels” exemption, but the trustee and the creditors know that those are working tools and not goods and chattels, plus work tools are not in the state’s exemption list.

The creditors feel that the consumer used deception.

• An example of this is when a consumer buys an exempt property after selling a non-exempt property to delay or cheat the creditors.

• Another example is when the value of the item is worth more than what was declared. The exempt amount varies from state to state but for the purpose of discussion and as an example, say the exempt limit is $1,000, and the consumer claims that his/her exempt item is worth $2,000; the creditors disagree, according to them it is $3,000. The consumer has two choices, surrender the item to the trustee to be sold (he/she would get $1,000 because of the state exemption) or if he/she wants to keep the item, he/she must negotiate with the creditors and pay them the negotiated price of $2,000 or less.

• There are also cases of married consumers who double the amount of the state exemption, and of course, the trustee and the creditor would object to that amount and only grant the one half of the exemption.

Related article:

Objections to the discharge of debts in bankruptcy
Dismissing your case in bankruptcy