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Exemptions and the liquidation process of Chapter 7 bankruptcy

On Behalf of | Mar 26, 2021 | Bankruptcy |

Bankruptcy is a hard topic to talk about when a person is facing financial uncertainty. When their ability to stay ahead of their bills is gone and they no longer have the savings to pay for their own expenses, an Illinois resident may feel as though they have no options for getting back on their feet. They should recognize, however, that bankruptcy is not a judgment on their character or a punishment under the law: it is an opportunity to find relief from the crushing burdens of unmanageable debt.

Chapter 7 is a personal bankruptcy option that many individuals choose to pursue because it provides them with an efficient way to reduce or eliminate many of their debts. It involves liquidation, but also the protection of certain items of property through state or federal exemptions. Readers should not rely on this post as legal advice and instead should contact their trusted bankruptcy and debt relief attorneys for counsel.

What is liquidated during Chapter 7 bankruptcy proceedings?

Liquidation is another word for a sale. When an individual pursues Chapter 7 bankruptcy, they agree to sell off items of property that they own in order to raise money for the settlement of their debts. The process does not leave individuals without clothing to wear or a vehicle to drive to work; there are guidelines and exemptions that protect some property from liquidation.

An exemption is something protected from liquidation under the law. Federal bankruptcy rules, as well as Illinois state laws, provide exemptions that Chapter 7 filers may use to retain items of real and personal property. It is important that individuals fully understand the rules surrounding exemptions and how choosing different exemptions can impact their financial and tax obligations.

Why is Chapter 7 a good option for some debtors?

Chapter 7 bankruptcy is one debt relief option available under the law for financially strapped individuals. It is an option for people who do not have any extra money to pay down their debts and who are barely keeping themselves financially afloat. It is not for everyone, but for those who qualify, it can be a beneficial tool for pursuing a stronger future.

Bankruptcy is not a punishment, and it is not an indictment of a debtor’s character. It is a legal process designed to provide relief for men and women who need help moving forward. Staying on top of all of one’s bills can be hard. Could Chapter 7 bankruptcy be the answer to solving your financial worries?