What Happens To Your Animals If You File Chapter 7 Bankruptcy?

Many Americans consider their pets and other animals to be a cherished part of the family. But in legal terms, animals are not family members. So what could happen to yours if you need to seek Chapter 7 bankruptcy assistance? Should you worry about your pets? What about your prize racehorse or herd of cattle? Here's what every animal owner needs to know. 

Are Animals Part of the Bankruptcy?

Because they are classified as personal property by most U.S. laws, animals do become part of your potential bankruptcy estate. They generally must be listed along with other property on bankruptcy forms. You may need to value them using market pricing. 

Will Your Pets Be Sold?

The average pet owner generally doesn't need to worry about the Chapter 7 bankruptcy trustee taking away the family dog or cat. Some jurisdictions, in fact, specifically exempt pets from liquidation. However, if you live in a state without pet exemptions, there are still two important routes to protection.

The first route is what is known as wildcard exemptions. These are exemptions to liquidation that may be used to protect any type of property you wish. Each state lists the dollar amount you may exempt, and most pets would likely fall under this threshold. 

The other route to protecting your pet is the infeasibility of accessing the value of that asset for creditors. Most pets are of little financial value even though they are of great sentimental value. Even a purebred animal often does not command the same value as it had as a puppy or kitten. 

In addition, the trustee must also factor in the costs of caring for the animal. Food, grooming, health care, boarding, and more often make it a losing proposition for the estate. So it behooves the trustee to just exempt the asset.

Will Livestock Be Sold?

Livestock, horses, herds, and breeding animals may be a more difficult situation to handle. These often do have significant market value, especially if you already have an ongoing business. The trustee is more likely to consider liquidating these during Chapter 7 than they will pets.

Of course, you still have some of the same routes to protection as for pets. If your cow, for example, is not a business asset but a personal pet, the trustee may exempt it. And if the cost of caring for and selling the livestock would outweigh their market price, they may not bother. You can also use appropriate exemptions. 

Where to Start

No matter what your concern is about animals and your bankruptcy case, start by meeting with an experienced bankruptcy attorney in your state. With their guidance, you'll find the best route to ensuring your whole family — two- and four-legged — stay together. For more information about filing for Chapter 7 bankruptcy, reach out to a local lawyer.