Defending a complaint to recover “non exempt” property by the Chapter 7 Trustee.
A Debtor who files bankruptcy will eliminate all his unsecured debt and will be allowed to keep most of his property in order to get “a fresh start”. The property that the Debtor is allowed to keep is called “exempt property”. Most Debtors own only “exempt property” and so lose nothing in the bankruptcy.
Sometimes the Chapter 7 Trustee will disagree with the Debtor’s “Claim of Exempt Property” and file an Adversary Proceeding to recover this allegedly “non exempt” property. Even though the Debtor filed his petition voluntarily he is not allowed to dismiss his Chapter 7 to keep the Chapter 7 Trustee from recovering non exempt property for the benefit of creditors; he must defeat the Trustee’s Adversary Proceeding to protect this property.
A Debtor can often defeat an Adversary Proceeding to recover non exempt property by filing amended schedules to characterize and list the item of property under a category that is exempt, e.g. list a vehicle under “tools of the trade” to protect it when other vehicles have used up the vehicles exemption. The Debtor can also obtain an appraisal which shows that the value of the item is low enough to include it in the “wild card exemption”.