Three Things to Know About Asset Liquidation in Bankruptcy

If you are considering the possibility of filing for consumer bankruptcy, you are probably wondering how your bankruptcy filing will affect your property. Indeed, many consumers are worried that filing for bankruptcy will mean that they will lose all of their assets, or that all of their property will be liquidated. This is not how consumer bankruptcy works, and our Oak Park bankruptcy attorneys want to make sure you have the information you need. The following are three key things to know about asset liquidation in personal bankruptcy cases.

1. Assets are Only Liquidated in Chapter 7 Bankruptcy Cases

First, you should know that assets will only be liquidated in a Chapter 7 bankruptcy case if you are an individual or married couple filing for bankruptcy. In Chapter 13 bankruptcy cases, assets are not liquidated. Instead, in a Chapter 13 case, the debtor creates an approved repayment plan through which she or he repays debts over a period of three to five years and is able to get caught up on mortgage payments and car payments, for example, if they are in default. At the end of that period of three to five years, remaining debts can be discharged.

While some assets are liquidated in Chapter 7 bankruptcy cases, it is important to be clear that all assets are not liquidated, and in exchange for non-exempt assets being liquidated, you will have the clear benefit of having your debts discharged in order to get a fresh start.

2. Many of Your Assets Will Qualify for Illinois Exemptions

If you are filing for Chapter 7 bankruptcy in Illinois, you should know that many of your assets will qualify for exemptions and will not be liquidated. Accordingly, you will get to keep many of your assets while still being eligible to have your debts discharged. Since there are so many specific bankruptcy exemptions, it is important to discuss particular assets and their status with your lawyer. In general, however, Illinois bankruptcy exemptions say that you can exempt the following from liquidation:
  • Up to $15,000 equity in your home;
  • Up to $2,400 equity in a motor vehicle;
  • Alimony and support that is reasonably necessary;
  • Personal injury settlements;
  • Unemployment benefits;
  • Disability benefits;
  • Retirement benefits; and
  • Up to $4,000 of property of your choice through a “wildcard” exemption.
3. You Will be Able to Choose the Personal Property to Keep With the Wildcard Exemption

You get to choose the personal property you keep with the wildcard exemption. If you want to keep one luxury item worth $4,000, for example, you can do so. Or, for instance, you can keep a number of items of lesser value. The choice is yours.

Seek Advice from an Oak Park Bankruptcy Attorney

There are many misconceptions and myths about consumer bankruptcy, including incorrect information about property liquidation in consumer bankruptcy cases. Before you make any assumptions or reach any conclusions, you should seek advice from an experienced Oak Park bankruptcy lawyer who can assist you with your case. Whether you plan to file for Chapter 7 or Chapter 13 bankruptcy, our firm is here to help. Contact the Emerson Law Firm to learn more about the consumer protection services we provide to individuals and families in Oak Park.


See Related Blog Posts:

How Consumer Bankruptcy Reflects Larger Economic Trends

Options for Keeping Your House in a Bankruptcy Case

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