Will you lose your pets in bankruptcy? Pets create two issues in bankruptcy because pets are an asset and the care of your pets is an expense. Chapter 7 bankruptcy is more concerned about your assets whereas chapter 13 bankruptcy is more concerned about your income and expenses. So, let’s break down how pets are treated in each bankruptcy.
What Happens to Pets in Chapter 7 Bankruptcy?
Your pets are an asset; you do own them. The bankruptcy schedule of assets (Schedule A/B) has line 13 for the debtor to disclose your pets (Animals, Non-Farm). So, you must disclose your pets in bankruptcy. However, most people have nothing to worry about.
Your typical household pets: dog, cat, fish, birds, rodent etc., have no value. When listing pets on the bankruptcy schedules, you list them with zero value. You might list them like this: 2 medium size dogs, $0.00. No one is interested in selling Fido.
However, if you are an animal fancier, you can run into issues with your pets in bankruptcy. If you have show-quality pets, pure breed stock, or earn income from your pets in some way, such pets can have intrinsic monetary value. If you are that person and needing to file bankruptcy, you WON’T lose your pets, but you may need to file chapter 13 bankruptcy or otherwise negotiate with the bankruptcy trustee to keep the pets.
Exemptions are laws that allow you to keep assets in chapter 7 bankruptcy. Most states don’t have specific pet exemptions. If your state has an exemption, you should claim it to be on the safe side. However, since pets have zero value, your pets have no value in the bankruptcy. You won’t lose your pets in bankruptcy.
What Happens to Pets in Chapter 13 Bankruptcy?
The care of your pets is an expense, a monthly expense. Chapter13 bankruptcy requires you to pay something back over 36 to 60 months. As such, the dispute in chapter 13 is how much you can afford to pay back. Unfortunately, the pet care expense is a real hassle in chapter 13 bankruptcy. There is no uniform position on pets in bankruptcy, each bankruptcy district and trustee will have their take on the issue.
Generally, routine pet care expenses are not an issue. The basic feeding and routine veterinary care are typically accommodated by the bankruptcy court and trustee. Our firm uses a formula of $80 per month per dog and $30 per month per cat. If the overall expense is under $250 with multiple animals (depending on the income of the debtor), then the trustee usually doesn’t have an issue with the pet expense.
The problem with pets in bankruptcy arises when the care costs an extraordinary amount. If your pet has special needs, that can be a huge problem in chapter 13. I have gone toe to toe on these issues representing debtors that spend upwards of $600 to $900 per month on their pet. There is no easy answer and the resolution is always a negotiation that is specific to the case. In these sorts of cases, it is helpful if the pet is a service animal or emotional support animal. You can also draw on your state’s animal abuse and neglect laws as well as state animal companion laws to create legal cover for the high expense.
You Won’t Lose Your Pet’s In Bankruptcy
In most cases, having pets and filing bankruptcy is a non-issue. You either file a chapter 7 bankruptcy and your pets have no monetary value, or you are like most pet owners and your pets are relatively healthy requiring only routine feeding and care.
If you are a speacial case, don’t hesitate to file bankruptcy out of fear of what will happen to your pets. Hire a skilled bankruptcy attorney to navigate the case and get a resolution that makes sense. Bear in mind, if you need bankruptcy, you need it. Unloading your debt will allow you to better care for your animals in the future.