Is bankruptcy right for you?

Call (937) 401-5000
Client Login

  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Cope Law Offices logo

Cope Law Offices, LLC

Ohio Bankruptcy Attorneys

  • About
    • Our Firm
    • Russ Cope
  • Bankruptcy
    • Overview
    • Protection
    • Foreclosure
    • Chapter 7
    • Chapter 13
    • Unsecured Debt
    • Secured Debt
  • Locations
    • Dayton / Centerville
    • Downtown Dayton
    • Springfield
    • Vandalia
    • West Chester
  • Questions?
    • Bankruptcy Q&A
    • Reader Q&A
    • Ask a Question
  • Blog
  • Contact Us

Last Updated on December 30, 2013 By Russ Cope

What Happens if My Property is Sold in Bankruptcy?

8517727619_6f9727fd40_n

The likelihood that property will be sold in bankruptcy. This is a misconception that every bankruptcy blog should and does cover. The consumer’s biggest fear. “I will file for bankruptcy, but I’ll be ruined!”

“The trustee will take every last stick of furniture, my car, my home and sell it to satisfy my creditors. I’ll be living on Main Street in a cardboard box!”

Not true!

Contents

  • In Most Cases, Having Property Sold By the Trustee is Not Something You Need to Worry About
  • An Example of What Happens When a Car is Sold in Bankruptcy
  • Having Property Sold in Bankruptcy Doesn’t Defeat Your Exemption, You’ll Still Receive a Check

In Most Cases, Having Property Sold By the Trustee is Not Something You Need to Worry About

Stop the fantasy. Let me repeat what every other member of the bankruptcy bar will tell you: you will not lose all of your property in bankruptcy. Even if property is sold in a bankruptcy, you will be entitled to a check for the amount of your exemption.

What does this mean?

Let’s begin with a little background on exemptions. Most of the time, people file for Chapter 7 bankruptcy, shed their unsecured debt and move on to a fresh financial beginning without losing any of their property. This is the case, because most states, including Ohio, have enacted exemption laws that protect property, not only from creditors, but from the bankruptcy trustee as well. If the value of your property is below the exemption limit, the trustee can’t touch it.

For example, I wrote recently on this blog about the new Ohio Homestead exemption which allows married couples filing a joint Chapter 7 bankruptcy, to protect up to $250,000 of equity in their home. If you file bankruptcy with your wife and your home equity is less than $250,000, your home is protected as exempt. For more on the new Ohio Homestead exemption, see: Ohio’s Homestead Exemption in Bankruptcy Just Got a Lot Bigger!

An Example of What Happens When a Car is Sold in Bankruptcy

For an example of what happens when property exceeds an allowed exemption, we’ll use Ohio’s car exemption. Let’s say you own a car worth $7,000 free and clear, meaning there are no liens against the vehicle. You find yourself struggling with debt and decide to file for chapter 7 bankruptcy. Since Ohio’s car exemption only allows $3,450 of equity to be protected, the trustee may have some interest in selling the car. In most cases, your attorney will be able to negotiate a cash settlement which will allow you to keep the car, even when it exceeds the allowed exemption, however, even if the car were sold, you’d receive some of the proceeds from the sale. You wouldn’t “lose everything.”

Having Property Sold in Bankruptcy Doesn’t Defeat Your Exemption, You’ll Still Receive a Check

Just because property is sold in bankruptcy, it doesn’t mean that your exemption is defeated. In the example above, if the trustee were to sell your car, you would still be entitled to a check for $3,450, which represents the amount of the Ohio car exemption. When a chapter 7 trustee sells property, it doesn’t mean you lose everything, it only means that the non-exempt equity you have in the property is distributed to your creditors.

Remember, if the trustee sells your stuff, it doesn’t mean you lose everything. Your ownership interest is converted to the cash equivalent of your state’s exemption. For more information about how Chapter 7 bankruptcy may affect your property, contact an attorney.

Photo credit

About Russ Cope

Russ B. Cope is dedicated to legal standards that go far beyond filing cases — he is interested in your goals. Russ wants to be certain that each client is making an informed decision that will make their life better, and thrives on the interaction between lawyer and client.

  • Mail
  • |
  • Twitter
  • |
  • Facebook
  • |
  • LinkedIn
  • |
  • More Posts(82)

Categories: Chapter 7 Bankruptcy, Ohio Laws

Reader Interactions

Comments

  1. z says

    April 14, 2018 at 6:05 pm

    but what if they say that the car is worth 4000, but when they auction it off, they only get 2500?

    nobody seems to be addressing this situation online.

    Reply
    • z says

      April 14, 2018 at 6:08 pm

      i find it unlikely that the trustee would cover the difference, or the court… or anyone. i imagine a “well, we THOUGHT it was worth that much… I guess we made a boo-boo! sorry buddy, suck to be you!” will be what you would be getting from the trustee…

      after he took his fees out of the 2500 you were owed.

      court systems seem to almost always work like this. benefit ourselves first, then you later… if we can… if we feel like it.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Free Bankruptcy Evaluation

Privacy Policy

Dayton Office

6826 Loop Rd
Dayton, OH 45459
Map & Directions

Phone: 937-401-5000
Fax: 877-845-1231

Downtown Dayton

11 W Monument Ave, Ste 300
Dayton, OH 45402
Map & Directions

Phone: 937-648-0100
Fax: 877-845-1231

Springfield Office

2 W Columbia St, Ste 200
Springfield, OH 45501
Map & Directions

Phone: 937-284-8139
Fax: 877-845-1231

Vandalia Office

812 East National Road, Suite A
Vandalia, OH 45377
Map & Directions

Phone: 937-387-1598
Fax: 877-845-1231

Latest Posts

  • Dayton During the Pandemic: Local Economic Impact
  • Think Twice Before Reaffirming Mortgage Debt
  • Surviving the Government Shutdown (and Aftermath)

Footer

Dayton Office

6826 Loop Rd
Dayton, OH 45459
Map & Directions

Phone: 937-401-5000
Fax: 877-845-1231

Downtown Dayton

11 W Monument Ave, Ste 300
Dayton, OH 45402
Map & Directions

Phone: 937-648-0100
Fax: 877-845-1231

Springfield Office

49 E. College Ave, Suite 300A
Springfield, OH 45504
Map & Directions

Phone: 937-284-8139
Fax: 877-845-1231

Vandalia Office

812 East National Road, Suite A
Vandalia, OH 45377
Map & Directions

Phone: 937-387-1598
Fax: 877-845-1231

  • About
  • Bankruptcy
  • Questions
  • Blog
  • Payments
  • Contact

© 2025 · Cope Law Offices, LLC · Terms · Disclaimer · Privacy · Sitemap
Legal Marketing by National Bankruptcy Forum, a JSO Consulting business.