One of the most frequently asked questions by debtors who have filed bankruptcy is, “What does the Notice of Proposed Abandonment Mean That I Received From The Court?” The word “abandon” sounds alarming to someone who is unfamiliar with the bankruptcy process. Most debtors do not read beyond the heading and go directly into panic mode. The notice actually states that the trustee has determined that the “property of the estate described below . . . [is of] inconsequential value.” Put another way “your stuff was not valuable enough.”
The Notice of Proposed Abandonment is a form notice that trustee’s have to file usually at the conclusion of a bankruptcy case to formerly release his/her interest in the debtor’s property. It is not something to be afraid of as it simply means that that the trustee doesn’t want to sell your home, etc. The trustee has determined that your property (i.e., real estate) does not have enough equity to pay a meaningful dividend to your unsecured creditors.
Abandonment in a bankruptcy is a good thing. There is nothing to be afraid of as the abandoned property becomes yours again.
Although unsecured creditors could object if they believe there is something of value that should be liquidated it is extremely rare. Trustee’s are experienced at valuing assets and through an analysis of your case make a determination as to whether the property being abandoned could have netted proceeds for unsecured creditors if sold. Let’s not forget, trustees make a commission on selling assets which are part of a bankruptcy estate. The trustee is not going to abandon his/her interest in something valuable.
Upon abandonment the property being abandoned becomes yours again to do as you see fit. So if you just received the Notice of Proposed Abandonment you are one step closer to discharge and your fresh start.