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Will The Bankruptcy Court Sell Pets And Other Animals?

Most people who end up in bankruptcy court don't know anything about the process, so it's not unusual for them to be confronted with unexpected and unpleasant surprises after they file petitions. One of those surprises is debtors are required to list their pets and other animals they own as part of their assets, which leaves many petitioners wondering if the trustee will actually sell them to pay off creditors. Although it's exceptionally rare for this to happen, it is possible that you may have to give up your animals when you file for bankruptcy. Read this article to learn more. 

How Bankruptcy Court Treats Pets

As far as the bankruptcy court is concerned, animals are the property of their owners (though many pet owners feel the opposite is true). As such, the court requires you to list all the animals you own on the asset declaration form and give an estimated value for them. You must also include the amount of money you spend on their care on the sheet detailing your monthly expenses.

The animals then become part of your bankruptcy estate. The trustee will consider the value of your animals and determine whether or not it is worth selling them to generate cash to pay your creditors. Theoretically, if an animal's value is high enough, then the trustee would make the effort to sell it at an auction. The trustee would then give you any exemption amount you're entitled to and distribute the rest to your creditors.

In reality, the trustee is unlikely to do this for several reasons. First, the trustee would have to take physical possession of the animals, which means housing and feeding them until suitable buyers can be found. The cost of doing so will almost always be more than the value of most household pets. Secondly, unless you have quite a bit of livestock or a particularly famous pet, it's unlikely the trustee will be able to find someone to buy your animal.

Third, even if the animal had commercial value (e.g. a breeder dog), most likely it will only bring in a few hundred dollars. Trustees are typically only interested in selling high-value possessions that will net a few thousand dollars and aren't willing to put the effort into dealing with assets that won't have a significant impact on your debt if sold.

What to Do If the Trustee Wants to Sell Your Animals

If your animal is valuable enough that the trustee would likely take it and sell it to pay your creditors, there are a couple of things you can do to avoid having it confiscated by the court. The first is to take advantage of any bankruptcy exemptions available. Many states have exemptions specifically for pets. For example, Alaska allows individuals to exempt pets with a combined value of up to $1,250. If a state doesn't have a specific pet exemption, you can use a federal wild card exemption for the animal.

Another option is to claim the animal as a source of income and use the Tools of the Trade Exemption. This exemption allows people to keep the resources they need to continue in their trades or professions up to a certain amount. In Kansas, for instance, you can keep a total of $7,500 worth of tools and other resources. This exemption is best for people who actually make money from their animals, such as selling eggs from chickens or breeding puppies.

As noted previously, though, it's highly unlikely you will have to face such a situation. If you are particularly concerned about the issue, consult with a chapter 13 bankruptcy attorney who can provide advice and ideas about protecting your animals from the auction block.