How Do Pennsylvania Courts Value Property in Bankruptcy Cases?

Bankruptcy can be an unpleasant experience, but it may be the best way to get out from under debts you can no longer afford and get a fresh financial start. During bankruptcy, you may need to submit reports about your property and how much it is worth. If property is not valued correctly, you might encounter trouble.

Much property is evaluated based on its fair market value, which may fluctuate over time based on numerous factors you cannot control. Generally, the fair market value of a property is based on what the property may sell for currently, not necessarily what you paid for it or what it could be worth in the future. Courts tend to focus on larger or more valuable property, not small personal items that are not particularly valuable or expensive.

Call our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at 215-639-5297 for a free, private review of your case.

How is Property Valued by Pennsylvania Bankruptcy Courts?

Courts may value property at the current fair market value, which may be determined by multiple factors unique to the property.

Determining Fair Market Value

Fair market value is not a number that is set in stone. It is based on what the property may reasonably sell for on the open market. This value will likely change over time.

For example, when people buy a home, they often expect, or at least hope, that its value will go up over time. So, if you must value the home for a bankruptcy case, its fair market value may be more than what you actually paid for it.

Factors such as the property’s condition, its location (for real property), and overall demand for similar properties may determine the fair market value.

Appraising Fair Market Value

The fair market value of your property might not be something we can determine on our own. We may need third parties to evaluate and appraise the property. In fact, it may be best to have experienced professionals appraising your property, as their conclusions may be harder to challenge if the value is disputed.

Importance of Accurate Appraisals

The value of certain property, especially real property, is somewhat subjective. What you paid for it might not be what the property is worth. Value also tends to fluctuate over time based on numerous factors.

Some properties may be more hotly contested than others. For example, the fair market value of a piece of real property in an up-and-coming neighborhood might skyrocket in just a few years. If you have such a property, it is crucial to evaluate it carefully and seek opinions from multiple experts.

What Kind of Property is Evaluated by Pennsylvania Bankruptcy Courts?

While valuing property is crucial in a bankruptcy case, not all property may need to be professionally appraised.

Real Property

Perhaps the most significant property in a bankruptcy case is real property. Whether you own a home, business, or an empty plot of land, it must be properly appraised.

Real property is often very valuable. Even small plots of land may be extremely valuable in the right neighborhood. What is more, the value of real property fluctuates significantly over time.

Especially Valuable property

Some property may need to be evaluated even though it is not real property. Courts tend to focus on non-exempt, valuable property. Property that may need to be valued for your bankruptcy case may include, but is not limited to, the following:

• Vehicles
• Computers and electronics
• Collectibles
• Artwork
• Antiques
• Business assets (e.g., intellectual properties, inventory, digital assets)

Luxury Property

The court will also likely want to value certain luxury items. This may include clothing, jewelry, or even furniture that is considered a luxury. Designer items usually fall into this category and should be accounted for.

Often, this kind of property is worth a fair amount of money and may be seized by the bankruptcy trustee if it is not exempt.

Why is Evaluating Property Important in Bankruptcy Cases?

It is important that our Harrisburg, PA bankruptcy lawyers are as accurate as possible when evaluating your property. If our numbers are incorrect, you might be in trouble.

Avoiding Fraud

If we inaccurately report the value of your property to the bankruptcy court, you may be suspected of fraud. People sometimes try to hide assets by making something seem less valuable than it really is. If the court suspects that we are not totally honest about your current financial situation, including the value of your property, your bankruptcy case could be dismissed.

Chapter 7 Liquidation

If a bankruptcy trustee seizes your property, it will be liquidated and used to pay your debts. While this can be uncomfortable, it may be unavoidable for some. If this happens, you want to make sure that the property is sold for its maximum value, which can help eliminate your debts.

If property is undervalued, it may be liquidated and sold for less than it is worth. This means you would lose the property, and less money may be applied to your debt.

FAQs About How Pennsylvania Courts Value Property During Bankruptcy Proceedings

How Do Pennsylvania Courts Value Property for Bankruptcy Cases?

Property is usually valued at its fair market value, which reflects what the property would likely sell for on the open market. Fair market value tends to fluctuate over time, but we must base your property’s value on its current fair market value.

What if Property is Not Valued Correctly in a Bankruptcy Case?

If your property is valued correctly, the court may suspect you of fraud. Misrepresenting the value of your property during bankruptcy is a serious violation, and your case could be dismissed. If any property is misvalued, we should correct the error and bring it to the court’s attention as soon as possible.

How Can You Make Sure Your Property is Valued Accurately for Bankruptcy?

It may be a good idea to have the property evaluated by multiple professionals, especially if its value is subject to change. The more evidence we have backing up our evaluations, the better.

What Kind of Property Should Be Valued for Bankruptcy?

Property you should have valued for bankruptcy includes, but might not be limited to, real property, vehicles, jewelry, collectibles, antiques, and anything else that might be particularly valuable.

Ask Our Pennsylvania Bankruptcy Attorneys to Assess Your Case

Call our Allentown, PA bankruptcy lawyers at Young, Marr, Mallis & Associates at 215-639-5297 for a free, private review of your case.