Bankruptcy is a big word with a lot of misconceptions attached to it. Many West Virginians understand bankruptcy to be a process where a person can get rid of some or all of their debts but that may leave them with no credit and other headaches. While bankruptcy can involve tradeoffs and may benefit some more than others, it is a legal option for individuals who cannot manage to stay ahead of their outstanding obligations.
One form of personal bankruptcy is Chapter 7 bankruptcy, and it is also referred to liquidation bankruptcy. Chapter 7 bankruptcy should not be confused with Chapter 13 bankruptcy, which involves the creation of a repayment plan for the satisfaction of an individual’s qualifying debts.
Liquidation is another word for a sale, under Chapter 7 bankruptcy a person’s assets may be liquidated in order to pay off their creditors and relieve them from some or all of their debts. It is important that readers remember that exemptions allow individuals to keep some of their property and assets so that they have a way to live following their bankruptcy proceedings. Without exemptions, bankruptcy could leave individuals without homes, vehicles, or other necessary items of property.
The benefits of liquidation bankruptcy
It may seem harsh to consider a legal process whereby an individual must sell off what they own to get out of debt. However, Chapter 7 bankruptcy is a legal and beneficial process for some who do not qualify for Chapter 13 bankruptcy and the opportunity to create repayment plans.
Before filing for bankruptcy, debtors should ensure that they understand what bankruptcy options they have and what outcomes are possible with each. They may choose to discuss their bankruptcy choices with knowledgeable local attorneys before committing to bankruptcy proceedings of their own.