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Will All My Assets Be Liquidated in a Chapter 7 Bankruptcy?

 Posted on April 18, 2024 in Bankruptcy

IL bankruptcy lawyerIt can be extremely difficult to make ends meet. The cost of living keeps going up, but finding a job with a decent salary keeps getting harder and harder. Sometimes, people simply cannot pay their bills and end up in overwhelming debt. When that happens, they might face bankruptcy. In a Chapter 7 bankruptcy, your assets are liquidated in a process that helps you cover your costs, emerge from debt, and start fresh. If Chapter 7 bankruptcy seems like an inevitable step for you, speak with a qualified Geneva, IL bankruptcy attorney to find out which of your assets might be safe from liquidation.

What Are the Exemptions to Liquidation?

The word bankruptcy is taboo nowadays, with people mistakenly believing it means you need to give away any money and assets you have. It carries the negative connotation of being a punishment for going into debt. The truth is that bankruptcy is more like an opportunity. It gives people the chance to clear their debt and start fresh.

Commonly known as liquidation bankruptcy, Chapter 7 bankruptcy is when you sell off assets to earn money to pay creditors to whom they are in debt. Fortunately, there are several exemptions to liquidation that can protect your ownership of various assets. These include:

  • Equity: By law, you can protect up to $15,000 of the equity in a single-family home, up to $2,400 of the equity in your car, and equity in other things like furniture and appliances.
  • Income: Your wages are generally exempt from liquidation, and an average of about 85% of your gross earnings is safe.
  • Public benefits: This includes things like welfare, public assistance, social security, veteran’s benefits, and unemployment compensation.
  • Tools of the trade: Up to $1,500 in tools you need for your job are protected.
  • Personal items with sentimental value: Family photos, family jewelry like wedding rings, and other items of sentimental value can be protected from liquidation.

In addition to the above, retirement accounts are also exempt from liquidation, so even if it feels like bankruptcy is a financial blow, it is actually a way to protect your financial future.

Schedule a Free Consultation with a Kane County, IL Bankruptcy Lawyer

If you need to consider Chapter 7 bankruptcy, consult with our DuPage County, IL bankruptcy attorney to see how you can protect some of your assets as you plan to move past this financially unstable period. Call DLAW, PC at 331-222-7978 to schedule a free consultation.

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