Filing for bankruptcy can be overwhelming, particularly when an Illinois resident does not understand the process. They may hear terms related to bankruptcy and experience confusion when they attempt to understand what it all means. Readers should understand that the information contained in this post does not provide any legal advice and the best answers that they can get to their bankruptcy questions may come from bankruptcy attorneys.
However, one important concept that readers can learn about before filing for bankruptcy is liquidation. This post will only touch on the topic and further inquiry is encouraged for those who are considering filing for Chapter 7 bankruptcy.
Selling off property to satisfy creditors
Chapter 7 bankruptcy’s liquidation provisions are premised off the idea that those who use Chapter 7 bankruptcy do not have disposable income to use to pay off their debts. Unlike Chapter 13 bankruptcy, which reorganizes an individual’s income so that they may pay down their debts, Chapter 7 bankruptcy presumes that a debtor has no extra money with which to use to reduce their outstanding financial obligations.
Liquidation, therefore, is the means through which a debtor can secure money to repay their creditors. Liquidation involves selling off property, but individuals should understand that some property is exempt from the process. Their bankruptcy lawyers can explain these intricacies to them when they discussed their filing options.
The goal of Chapter 7 bankruptcy
Although liquidation can seem like a significant undertaking, individuals who choose to file for Chapter 7 bankruptcy understand that the outcome of a bankruptcy discharge will outweigh their concerns about selling their property. A bankruptcy discharge may eliminate some or all of an individual’s debts and set them on the path to financial freedom. Outcomes for different individuals can vary in Chapter 7 bankruptcy, and individuals can learn more about their bankruptcy options before making any decisions about pursuing different legal paths.