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Old November 24, 2013, 02:13 AM   #1
TennJed
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Guns and bankruptcy

First a couple if things

1) If this is a off topic thread I apologize and feel free to lock it

2) I am not in danger or in need of filing bankruptcy, I am honestly just curious.

How does bankruptcy affect gun collections? Do you lose your guns?
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Old November 24, 2013, 08:11 AM   #2
kayakersteve
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Any asset, if known about, can be used to sell when going through bankruptcy.
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Old November 24, 2013, 08:26 AM   #3
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Steve is right, they are an asset. However being an asset of "personal property" - i.e. the same class class as clothing and furniture, many states have laws that specifically protect personal property assets in a bankrupcy proceeding. You would have to research your particular state bankrupcy laws to determine if firearms get lumped in with other excludable personal property and are excludable from the asset listing or if they are lumped in with other property (like investment property, collectables, etc) which is siezeable.
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Old November 24, 2013, 10:10 AM   #4
Sgt Pepper
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What Doyle said. Plus, it can also depend on which bankruptcy chapter you file under. The two most common personal bankruptcy chapters are 7 and 13. 7 is liquidating the estate and losing all non-exempt assets. 13 is reorganizing the estate and making future payments through a plan, which does not typically involve an involuntarily asset sale.
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Old November 24, 2013, 10:35 AM   #5
JERRYS.
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guns like the furniture in your house can be taken away in a bankruptcy hearing. if it can be sold at a sheriff's auction to cover debt it will be.
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Old November 24, 2013, 11:28 AM   #6
Frank Ettin
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Quote:
Originally Posted by Doyle
..You would have to research your particular state bankrupcy laws...
Bankruptcy is federal. You might be thinking of state laws regarding assets that may be seized to satisfy a judgment, but that's a completely different matter.

ETA: Oops! I went back and did a little research. Exemptions for the purposes of the federal bankruptcy laws may be determined by state law. This illustrates the importance of doing some research on occasion.
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Old November 24, 2013, 01:15 PM   #7
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Note well:

It is illegal for someone who is petitioning for relief under the bankruptcy laws to hide or transfer assets to place them outside the reach of creditors or the bankruptcy court.

Anyone who in any way suggests or hints at doing so will at least receive an infraction.
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Old November 24, 2013, 01:57 PM   #8
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Thanks guys, interesting stuff. I was watching a movie last night where someone was going through a bankruptcy and the question popped in mind. I deffinately don't want anyone suggesting anything illigal
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Old November 24, 2013, 04:01 PM   #9
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And if I recall correctly, I did see one who spent time in prison due to having not listed all his assets.
So yes, they may find out that you had hidden assets.
The federal rules used to allow federal or state exemptions. Provided for by state law.
Some states have a 'wild card' exemption that allows any property up to a certain amount to be exempt.
At one time Florida had a homestead exemption with no limit.
It was notoriously abused by a high profile individual who moved to Florida, purchased a $4 million dollar house, established his residency, and declared bankruptcy.
The law was changed.
In California the homestead exemption was $75,000, or $150,000 for a married couple.
That wouldn't give you much of a house here.
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Old November 24, 2013, 05:03 PM   #10
Chaz88
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Knew some people in Florida that went through bankruptcy before the laws were reformed at the federal level. They only had to give up the things that were securing the loans. They were allowed to reaffirm the debt on the house and a car. Another car that was paid for they had to give up or pay the value of it. Credit card debt only resulted in loss of property if the card company sent someone to the hearing to ask for the return of charged property. The only ones that did was Sears. Sears would take their stuff back no matter what, even if it was junk. Then throw away the junk. The property exemption allowed them to keep the rest.
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Old November 24, 2013, 05:19 PM   #11
JERRYS.
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different chapters of bankruptcy.

next a few guns are not assets, they wont bring enough to settle most debt. the ones who get in trouble are the ones with undeclared Rembrandts and gold coins.....
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Old November 24, 2013, 07:18 PM   #12
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Quote:
Originally Posted by JERRYS.
next a few guns are not assets, they wont bring enough to settle most debt.
Anything you own is an asset, and can be sold off toward settlement of your debts. Of course the sale of the assets won't completely cover the debts -- if you were worth more than you owed, you wouldn't be filing for bankruptcy.
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Old November 24, 2013, 09:26 PM   #13
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Exempt assets are assets that are exempt from sale to satisfy debts.
Such as jewelry and other collections up to the allowable amount of value for the exemption.
In the 1870s California's codes were written to include these exemptions. One of them was for the workman's tools of his trade.
He was to be allowed to keep the tools of his trade. And his clothes?
It makes sense, doesn't it? Unless you want to give him a welfare check.
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Old November 25, 2013, 10:57 AM   #14
Aguila Blanca
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Quote:
Originally Posted by David13
He was to be allowed to keep the tools of his trade.
And on this basis, a security officer might be allowed to keep his duty weapon. Beyond that, how would the minimal exemptions under bankruptcy laws prevent the sale/auction of a person's other firearms in the even of a bankruptcy?
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Old November 26, 2013, 07:07 PM   #15
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I'm willing to bet the judge or whomever would allow some guns to be kept for the obvious reasons, but a collection implies that there is excess beyond the need for hunting, defense, target shooting hobby, etc. I wouldn't expect to be able to keep that excess, and a thoughtful gun collector could produce more cash to satisfy his debts by selling each gun individually, rather than as a collection or by the Sheriff.
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Old November 26, 2013, 07:17 PM   #16
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Quote:
Originally Posted by RX-79G
...a thoughtful gun collector could produce more cash to satisfy his debts by selling each gun individually, rather than as a collection or by the Sheriff.
In a bankruptcy proceeding the debtor and the bankruptcy trustee would be able, under court supervision, and with notice to and the consent of the creditors, work out and pursue the most advantageous ways to turn assets into cash.
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Old November 26, 2013, 07:41 PM   #17
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I don't have the exemptions in front of me. Once upon a time when I did there was an exemption for collections, such as stamp collections, etc., as well as jewlery, etc., as what a woman would have as part of her usual possessions.
Once you state and file the exemption, the trustee has no power over it.
I suppose the trustee or a credit might bring a proceeding to have the judge determine the value of the items, or otherwise question the legitimacy of it.
Let me check for a paragraph.

704.020. (a) Household furnishings, appliances, provisions, wearing
apparel, and other personal effects are exempt in the following
cases:
(1) If ordinarily and reasonably necessary to, and personally used
or procured for use by, the judgment debtor and members of the
judgment debtor's family at the judgment debtor's principal place of
residence.

Even that dim-witted v p guy knows a shotgun is an ordinary household possession.

A self defense hand-gun.

Someone else mentioned a security guards gun, or guns, a tool of the trade.

704.040. Jewelry, heirlooms, and works of art are exempt to the
extent that the aggregate equity therein does not exceed six thousand
seventy-five dollars ($6,075).
Grandads valuable rifle, pistol.

Private pension plan. I suppose one could make a claim that their gun collection was part of a private retirement plan, to become a gunsmith as a retirement plan.
All you need is that one judge who has planned to retire and use his tools to work on cars or motorcycles the rest of his life as his retirement to hear your case. He will rubber stamp your plan.
These are just some of one of the California exemption plans. There may be other ideas that would work. The worst case scenario is that the judge will say no, some of these guns must be sold.
Now, this is NOT advice.
If you have a $100,000 or $200,000 gun collection, you may want to liquidate some of it BEFORE YOU EVEN THINK ABOUT BANKRUPTCY.
Your intent is most important there.
Oh, and I give no advice whatsoever here.
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Old November 26, 2013, 08:35 PM   #18
Frank Ettin
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Quote:
Originally Posted by David13
...If you have a $100,000 or $200,000 gun collection, you may want to liquidate some of it BEFORE YOU EVEN THINK ABOUT BANKRUPTCY...
So there can be no misunderstanding, please clarify that what you mean is that one should sell off valuable assets and pay his debts and thus perhaps avoid having to file for bankruptcy relief. (Note post 7.)
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Old November 26, 2013, 11:24 PM   #19
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Well, Mr. Ettin, since David13 did provide "before you even think about bankruptcy," (emphasis added) perhaps the suggestion was an innocent one.

But point taken. This is an area that fascinates me. This whole vanishing of debts confounds me, especially at the corporate level. But that's for a different forum altogether.
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Old November 26, 2013, 11:54 PM   #20
Frank Ettin
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Quote:
Originally Posted by Mr. James
Well, Mr. Ettin, since David13 did provide "before you even think about bankruptcy," (emphasis added) perhaps the suggestion was an innocent one....
Quite possibly -- which is why I didn't immediately respond punitively. I would still be happier if he would clarify his statement so there is no misunderstanding.

Quote:
Originally Posted by Mr. James
....But point taken. This is an area that fascinates me. This whole vanishing of debts confounds me,...
Nonetheless, it was apparently of interest to the Founding Fathers since they expressly provided in the Constitution that among the enumerated powers of Congress shall be the power to (Article I, Section 8):
Quote:
...To establish ...uniform laws on the subject of bankruptcies throughout the United States;...
But as you pointed out, the philosophical dimensions of the notion of giving a debtor a fresh start is outside the scope of this forum.
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Old November 29, 2013, 09:49 AM   #21
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Federal bankruptcy law allows a state to "opt out" of the federal schedule of exemptions and have state law exemptions apply in bankruptcy. The idea back in the 70s was to get states to think about updating their laws because many were woefully out of date and applied outside the bankruptcy context. If a state has opted out (and many have) then the state exemption laws must be applied in federal court. IIRC, that is one advantage of living in Florida and Texas --- those states have an unlimited homestead exemption (no limit on the value of the home exempt from collection unless waived which is the case in mortgages).
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Old November 29, 2013, 11:52 AM   #22
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There is nothing unethical or contrary to bankruptcy code in engaging in pre-petition planning. This sort of planning can help one avoid pre-petition actions that will be voided as transfers in fraud of creditors or preferences. Planning to have enough cash to pay bankruptcy counsel is also not a trivial matter.

For example, if you live in a state in which there is an exemption for a personal vehicle, but you do not have a reliable vehicle and you will be poorly positioned to purchase a vehicle after you have filed a bankruptcy petition, your bankruptcy counsel may advise you to use your resources to obtain a reliable vehicle prior to filing your petition. Selling your assets to pay debts prior to filing your bankruptcy petition has pitfalls. If you only pay some of your debts, you may invite a preference claim from the trustee. If you sell your assets to raise funds that are subsequently used to satisfy your debts ratably, i.e. paying all of your creditors 45% of the amount you owe them, you may be liable for any misrepresentations to your creditors, and you are very likely to incur federal income tax liability on the amount you did not pay.

None of the above is legal advice. Instead, it is an exhortation to use care.

As is so often the case, the real answer is to consult an attorney in your own state. Where the matter is bankruptcy, it is prudent to consult someone who regularly practices in that area.

Last edited by zukiphile; November 29, 2013 at 12:48 PM.
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