Today I'd like to clear up a common misconception relating to non-exempt property. As you may recall from previous posts, exempt property is property you're entitled to keep upon filing for bankruptcy; non-exempt property is property which the trustee will be entitled to sell for the benefit of your creditors once your case is filed.
As a Sacramento bankruptcy attorney I often encounter people who think that if an item of property doesn't fit into an exemption category then they'll definitely have to give it up. In fact, in many instances debtors will not have to surrender their non-exempt property.
The reason why some non-exempt property may be retained by the debtor has to do with the nature of property and how it's valued for purposes of bankruptcy.
The fact is some items of property, while perhaps valuable, are simply cumbersome. For example, say you have an antique mahogany bed whose value exceeds the dollar amount allowed for household goods. Will you have to give it up? Not necessarily.
In assigning a value to property we use what's called the replacement value of the item. If you were to go out and buy this bed new it might cost $2500. However, if the trustee takes custody of your bed and sells it at an auction he may only get $800 for it. Throw in the expense and trouble of moving and storing the bed and you can see why a trustee may be reluctant to take the item even though it's technically considered non-exempt property.
