Glad you asked.
Frequent readers will recall that the concept of property of the estate, described at 11 USC 541, is a broad category of stuff. In short, everything.
When a bankruptcy filing happens, a bankruptcy estate happens. Poof!
And all your stuff is in it. Let me be more precise: when a person files a Chapter 7 Bankruptcy in Arizona, with or without an Arizona bankruptcy lawyer, the filing creates a bankruptcy estate that contains all the assets of whatever kind and wherever located of the debtor.
That property gets processed: it may be declared exempt by force of law, when the date to object to exempt property comes and goes.
And most property in a bankruptcy case in Arizona is exempt, or over-encumbered, or worthless. Over-encumbered is your house, currently worth ten dollars, with a four-hundred thousand dollar mortgage on it, based on last week's appraisal. Worthless is your used paper napkin collection.
But not your Beanie Baby collection, which I have discussed elsewhere in this blog.
And probably not your airline tickets.
So here we are talking about discharging two million dollars in debt. And the prospective debtor tells me "We have these airline tickets. And we are going to Montana. To see family. Period."
I speak fluent husband. And I understand the truth of several wisdom texts, the pinnacle of which is "When Mama ain't happy, ain't Nobody happy!"
Therefore, they're going to Montana to meet with family.
BUT IF THEY HAVE AIRLINE TICKETS ON THE DATE OF FILING, THOSE ARE ASSETS AND THEY ARE NON-EXEMPT. PERIOD.
That means that they can keep the tickets which were purchased three months ago, rather than turning them in for a refund and buying food.
But hear me and hear me well: the airline tickets have to be listed in the bankruptcy schedules at their fair market value.
And the debtor will get to pay for the tickets twice; once three months ago to the airline company, and again after the filing, to the trustee.
The tickets, after all, are assets, and they are neither worthless, nor are they exempt.
That leaves one category, a valuable non-exempt asset.
