How to Value Personal Property on Your Bankruptcy Petition

Here are the basic methods for figuring out the value of your property in bankruptcy.

When you file for bankruptcy, you must disclose the value of all of your personal property—which is everything other than real estate, and you'll disclose that, too—in your bankruptcy schedules. The property value will depend on how much it would cost to replace the asset with a comparable item similar in age and condition. Read on to learn more about how to value personal property in bankruptcy.

Find out about the bankruptcy forms you'll fill out before filing your bankruptcy case.

The Importance of Property Valuation in Bankruptcy

In Chapter 7 bankruptcy, you get to keep the amount of property your state decides is necessary to maintain a job and home. You can protect the property with a bankruptcy exemption. Exemptions vary from state to state.

If the value of an asset exceeds the amount of your exemption, the appointed bankruptcy trustee can sell it to pay back your creditors. Keeping the property depends on your ability to protect all of its equity.

It works differently in Chapter 13. You keep all of your property; however, you must pay certain creditors an amount equal to the value of your nonexempt assets—and likely more. You'll pay this amount in your repayment plan.

Failing to value your personal property accurately can put your assets at risk.

Bankruptcy's Replacement Value Standard

When valuing your personal property in bankruptcy, determine the replacement value of the asset. Replacement value is the cost of replacing an asset with an item similar in age and condition. It's what a retail merchant would sell a like item for after taking into account its shape and age.

How to Value Motor Vehicles

For most debtors, after a house, a car or other motor vehicle is their most valuable personal property. Luckily, there are numerous sources you can use to determine its value.

Valuation guides. Motor vehicle valuation guides are an excellent source because they're usually free and easy to use. They also allow you to customize the valuation to the particular characteristics of your vehicle and provide a decent estimate of value. Check with the local office of the trustee to find out if the office prefers a specific guide. For instance, some offices prefer NADA, while others will accept the Kelley Blue Book.

If the value of your vehicle is below your motor vehicle exemption amount, using a valuation guide is often enough. But be aware that if the value is close to your exemption amount, it can be a good idea to get a more accurate valuation through an appraisal.

Learn more about protecting property with bankruptcy exemptions.

Comparable sales in the area. If you have an older or unique vehicle, again, using a valuation guide probably won't reflect its value accurately. In that case, it might be helpful to check how much people and dealerships are advertising and selling similar vehicles in your area. Also, check online sources.

Appraisals. An appraisal will usually provide you with the most accurate reflection of your vehicle's value. This route is best if your car is worth close to or above your exemption amount or if you have an antique or classic car.

Valuing Household Goods, Furnishings, and Clothing

Household goods, furnishings, and clothing typically lose their value quickly after you buy them. A viable way to value these assets is to go to different thrift stores, flea markets, or garage sales to see the selling price for similar items. However, keep in mind that if you have unique or a valuable asset, such as a fur coat or the ruby slippers from the Wizard of Oz, you'll want to consider getting the item appraised.

Jewelry, Collectibles, and Other Unique Assets in Bankruptcy

If you own jewelry, you might need to get it appraised, but not always. For example, most costume jewelry won't be worth much, and won't be of interest to the trustee. The same is likely true of a standard wedding set. The trustee will likely take your word for the value, as long as it seems reasonable. But the trustee will question anything you can't exempt or anything in which the value doesn't seem right. In those situations, it's best to be prepared with supporting documentation from a reputable jewelry appraiser before filing your case.

Talk With a Bankruptcy Lawyer

One of the most costly mistakes filers can make is not determining what will happen to property in bankruptcy. If you aren't sure, you'll want to consult with a bankruptcy attorney. Many will meet with you at no cost.

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