Liquidation is an important term in the Chapter 7 bankruptcy process. Before a New Jersey resident begins the paperwork to file for Chapter 7 protections, they should be fully aware of what will be asked of them once their bankruptcy is underway. Consultation with a knowledgeable and compassionate bankruptcy lawyer is a good first step for those with bankruptcy questions.
This post will generally discuss liquidation in the context of a Chapter 7 bankruptcy. The information contained herein is not legal or financial advice. More information on the legal and financial ramifications of bankruptcy should be discussed with informed professionals.
The purpose of liquidation in Chapter 7 bankruptcy
To understand liquidation, a reader should know why a debtor may end up using Chapter 7 bankruptcy over Chapter 13 bankruptcy. If a person does not have sufficient income to create a repayment plan in Chapter 13, their other option is to seek Chapter 7 protections. Chapter 7 is for people whose incomes care not sufficient to cover their expenses and repay their creditors.
When a person does not earn enough money to live and pay off their debts, they may have to sell off or liquidate their property to secure money to give to their creditors. Liquidation is the tool that generates money for a debtor to get out from under their burdensome financial obligations.
Living through liquidation
Liquidation may sound overwhelming to readers, and it is a significant process. However, readers should remember that debtors in Chapter7 bankruptcy can protect some of their property from liquidation through the use of exemptions. Their bankruptcy attorneys can advise them on what they can exempt and how to protect certain items and assets.
Bankruptcy is not easy and there are many steps debtors must take to complete it and receive their discharges. However, bankruptcy can be a useful tool for those struggling with debt. Help is available from New Jersey-based financial and legal advisors.