An article on the Network Bankruptcy Law on exemptions touched obliquely on a point not widely discussed: debtors get to keep assets where the sale value of the asset equals the exempt amount PLUS the costs of administering the asset. A basic principle guiding what a Chapter 7 trustee does is that he only administer assets of the debtor where his sale of the assets results in a meaningful dividend to creditors.

Where I practice, trustees are not interested in opening a case where the gross funds in the estate is several hundred, or even several thousand dollars. By the time the trustee pays his commission, an accountant to prepare a tax return and examine claims, that sum of money won’t pay a meaningful dividend to creditors. In those situations, most trustees will abandon the non exempt value in assets.

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