Appraisals play a critical role in bankruptcy proceedings.  The value of the debtors assets as of the date of filing for bankruptcy will play a big role in determining the exempt items the debtor may keep and/or the amount of post-bankruptcy payments  to satisfy the creditors.

Typically, when a debtor is contemplating bankruptcy, his attorney will ask him/her to list all assets with their values and the amounts owed creditors.   Some debtors have a natural tendency to over value their possessions in terms of dollars because their reference to value is what the purchase price was.  Their attorney files the asset list with the petition to the bankruptcy court.  

The next step in the bankruptcy process is a meeting with the trustee assigned by the court to the case.  The trustee is going to be paid on a percentage of the value of the estate.  The trustee reviews the asset list and often hires an appraiser to value the assets.

Assets that the debtor will be able to keep, vary from state to state.  Generally in Florida, the debtor’s residence is exempt as long as they keep up with the mortgage payments.  Up to $1000 in personal property such as home furnishings, clothes, and jewelry are exempted.  Up to $1000 equity in the debtors automobile is exempted.   Everything else will either have to be turned over to the trustee or purchased back by the debtor.  Obviously, the debtor will benefit from a lower valuation to retain more assets.

The debtor has the right to hire his own appraiser to determine value to rebut the trustee’s appraised values.  Both the debtor’s and trustee’s appraisers are bound by professional guidelines to be impartial and not be influenced by the parties involved in the case.  However, valuations are very subjective and sometimes differ substantially between appraisals.