Colorado Bankruptcy Exemptions
Homestead appraisal values and the extent of the Colorado bankruptcy exemption law
The operative aspect of all Colorado bankruptcy exemptions relates to appraised value. The Colorado exemption statute provides the maximum value for categories of exemptions, in some circumstances the maximum value of individual items. Yet the Colorado exemption law falls short of establishing the standard by which value is determined. Courts across the country grapple with replacement cost, market value, retail prices, wholesale, and the affect of professional sales techniques upon value as compared to a novice seller forced to liquidate. Each of these appraisal methods result in different perceived value of any given asset.
How debtors should appraise exempt assets
Few trustees are interested in nominal or worthless assets, even though they may not be exempt. In practice, trustees are interested in turn-over of assets that, after deducting the cost of seizure, sale and accounting, yield a significant remaining balance for distribution to creditors. Moreover, a realistic value for liquidation through a trustees sale is highly affected by market demand. For common household items, clothes, and appliances, the cost of liquidation is seldom justified. Consider a garage sale price as a good indication of exemption value for these items. For liquid assets, real estate, vehicles, and other larger items easily sold, the preferred standard for debtors approximates the wholesale value at public auction.