Usually a debtor can keep most, if not all, of his or her belongings. Both federal and state laws exempt certain kinds of property from seizure. Sometimes, however, it is necessary to make arrangements with creditors that hold claims on particular items of property as security. Such arrangements are normally in the form of either redeeming the property or reaffirming the debt. You should consult your attorney before agreeing to redeem or reaffirm.
It is very rare for creditors to ask to see the contents of a debtor’s home and even rarer that such a request is granted so long as reasonable assurances are provided to the creditors as to the value of the debtor’s belongings. Third-party appraisals are more common where there is a dispute as to the value of property. Even if your property is appraised, many of your household belongings are exempt from the bankruptcy estate.
It is important to include all of your belongings on the bankruptcy form. Many of the items may be exempt from the bankruptcy estate. You are listing your belongings so the court knows what to exempt. The exempt items will not be taken from you.
In West Virginia, you can only exempt what is permitted in the West Virginia Code. To qualify for West Virginia exemptions, you must have lived in West Virginia for 730 days. If you have not maintained residency in this state for the past 730 days, the governing exemption law will be the place were you spent the majority of the last 180 days. Examples of some of the things the West Virginia Code allows you to exempt are Social Security benefits, unemployment compensation, veterans’ benefits, disability benefits, and alimony. You are also permitted to exempt a certain amount of your interest in your home and your car. Consult an attorney to determine exactly what else can be exempted in your particular circumstances.
Sometimes, confusion arises because of something called a bona fide security interest. When there is a bona fide security interest, something that would otherwise qualify as exempt does not. Property is subject to a bona fide security interest if the agreement under which it was purchased provides that if the buyer defaults on payments, the property may be sold in order to satisfy the buyer’s financial obligation. This is also sometimes called a secured debt, and the creditor is a secured creditor. For example, if you still owe money to the bank for your car, the bank may have a bona fide security interest in your car.
If you do not include all of your belongs, your bankruptcy action may become frustrated or delayed.
For more information, see: 11 U.S.C. §§ 521-522 (2015); W. Va. Code § 38-10-4 (2015); James W. Martin Jr., Bankruptcy, in The West Virginia Practice Handbook Vol.1 (The West Virginia State Bar, Young Lawyers’ Division, eds., 4th ed. 1996); National Consumer Law Center, Bankruptcy Basics (2007).