Will You Lose Your Cell Phone in a Bankruptcy?

One common question our clients ask us is whether they can keep their cell phones during and after bankruptcy. Most of us depend on our cell phones for many of our daily activities, including work. Without our cell phones, many of us would not be able to function in our daily lives. The good news is that most people can keep their cell phones while going through bankruptcy. Even though all of the property that you own, including your cell phone, must be listed within your bankruptcy schedules, there are legal exemptions you can take advantage of to keep your cell phone with you.

You Can Use an Exemption for Your Cell Phone

When you file for bankruptcy, you will need to list your cell phone as an asset. You also need to disclose your contract with your cell phone provider. Your cell phone payment is a monthly expense that you will need to include. If you have an executory contract or lease agreement as part of your cell phone plan, you must list it as an expense.

Most judges consider cell phones an ordinary expense because almost everyone has a cell phone and uses it daily. Many people do not have landline phones anymore, so bankruptcy judges do not consider cell phones to be luxury items. This is beneficial for debtors because it allows them to keep their cell phones without giving them up during the bankruptcy process.

Bankruptcy applicants have the right to exempt a certain amount of assets. You can use your exemption for your electronics, such as your cell phone and laptop. You also can use a wild-card exemption. If you use an exemption for your cell phone or other personal electronic devices, make sure you research your phone’s fair market value now. Do not list the value of your phone when you first bought it.

Most Trustees Will Not Sell the Debtor’s Cell Phone

In a Chapter 7 bankruptcy, the bankruptcy trustee has the right to sell or liquidate your assets. The trustee will use the cash from the sale to pay off your creditors. In most cases, trustees are not interested in selling the debtor’s cell phone. For one thing, cell phones typically lose significant value once they are purchased. New cell phones can cost over $1,000. Used cell phones are usually worth significantly less, making cell phones not worth the trustee’s time to sell. In a Chapter 13 Bankruptcy, none of the debtor’s assets are sold. Instead, the trustee works with the debtor to create a three-to-five-year repayment plan. 

Contact a Los Angeles Bankruptcy Lawyer

 Many people who are considering filing for bankruptcy have fears about what will happen to them, and losing a cell phone is one. If you are considering filing for bankruptcy, the best thing you can do is speak with an experienced bankruptcy lawyer who will walk you through the process. Contact the Los Angeles bankruptcy attorneys at  Bankruptcy Law Center today to schedule your initial consultation.