What Does Liquidation Mean in a Bankruptcy Case?
If you are currently thinking about personal bankruptcy, or if you have been doing some initial research into the consumer bankruptcy process, you will likely have come across the term “liquidation bankruptcy.” Understanding the distinctions among so many different bankruptcy terms can be difficult, and there are many overlapping terms that are used to describe different types of bankruptcy or bankruptcy processes. It is important to understand what liquidation means when it comes to consumer bankruptcy, but it is also important to know that there are types of consumer bankruptcies that do not involve any kind of liquidation. Our Oak Park consumer bankruptcy attorneys can give you more information about liquidation and the consumer bankruptcy process.
Liquidation Refers to the Trustee Liquidating Non-Exempt Assets
What does liquidation mean in a bankruptcy case? In short, in the consumer bankruptcy context, liquidation refers to the bankruptcy trustee liquidating non-exempt assets. According to the U.S. Courts, Chapter 7 bankruptcy is a type of bankruptcy in which the trustee “gathers and sells the debtor’s non-exempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.” Further, the Bankruptcy Code says that debtors can “keep certain ‘exempt’ property, but a trustee will liquidate the debtor’s remaining assets.”
In other words, liquidation means that all non-exempt assets will be sold, and the profits from the sales will be used by the trustee to repay creditors.
Only Chapter 7 is a Liquidation Bankruptcy
In terms of consumer bankruptcy types, only Chapter 7 is a liquidation bankruptcy. If you file for Chapter 13 bankruptcy (or, as some individuals do, Chapter 11 bankruptcy), your assets will not be liquidated. We will explain in more detail below.
You Can Still Keep Exempt Property in a Liquidation Bankruptcy
Even if you do file for a liquidation bankruptcy, you should know that you can keep a wide range of assets through Illinois bankruptcy exemptions. There are many exemptions under Illinois law, including exemptions for motor vehicle equity, personal property, income, retirement accounts, and more.
Chapter 13 Bankruptcy Does Not Involve Liquidation
If you want to file for consumer bankruptcy and do not want to file for a liquidation bankruptcy, you should know that Chapter 13 bankruptcy is another common type of consumer bankruptcy that does not involve the liquidation of any of the debtor’s assets. Instead, in a Chapter 13 bankruptcy, the debtor reorganizes debt through a repayment plan. To find out about your eligibility for Chapter 13 bankruptcy, you should talk with a lawyer about your circumstances.
Contact an Oak Park Bankruptcy Lawyer Today
Do you have questions about liquidation bankruptcy or reorganization bankruptcy? Or are you trying to determine your eligibility for a specific type of bankruptcy? Whether you have initial questions or concerns about the consumer bankruptcy process or you need assistance with a personal bankruptcy case, one of the experienced Oak Park bankruptcy lawyers at our firm can talk with you today. We have years of experience representing consumers in Illinois in consumer bankruptcy and consumer protection cases. Contact the Emerson Law Firm today to learn more about how we can help you.
See Related Blog Posts:
Top Things to Consider About Student Loans and Bankruptcy
Checklist for a Chapter 7 Bankruptcy
Liquidation Refers to the Trustee Liquidating Non-Exempt Assets
What does liquidation mean in a bankruptcy case? In short, in the consumer bankruptcy context, liquidation refers to the bankruptcy trustee liquidating non-exempt assets. According to the U.S. Courts, Chapter 7 bankruptcy is a type of bankruptcy in which the trustee “gathers and sells the debtor’s non-exempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.” Further, the Bankruptcy Code says that debtors can “keep certain ‘exempt’ property, but a trustee will liquidate the debtor’s remaining assets.”
In other words, liquidation means that all non-exempt assets will be sold, and the profits from the sales will be used by the trustee to repay creditors.
Only Chapter 7 is a Liquidation Bankruptcy
In terms of consumer bankruptcy types, only Chapter 7 is a liquidation bankruptcy. If you file for Chapter 13 bankruptcy (or, as some individuals do, Chapter 11 bankruptcy), your assets will not be liquidated. We will explain in more detail below.
You Can Still Keep Exempt Property in a Liquidation Bankruptcy
Even if you do file for a liquidation bankruptcy, you should know that you can keep a wide range of assets through Illinois bankruptcy exemptions. There are many exemptions under Illinois law, including exemptions for motor vehicle equity, personal property, income, retirement accounts, and more.
Chapter 13 Bankruptcy Does Not Involve Liquidation
If you want to file for consumer bankruptcy and do not want to file for a liquidation bankruptcy, you should know that Chapter 13 bankruptcy is another common type of consumer bankruptcy that does not involve the liquidation of any of the debtor’s assets. Instead, in a Chapter 13 bankruptcy, the debtor reorganizes debt through a repayment plan. To find out about your eligibility for Chapter 13 bankruptcy, you should talk with a lawyer about your circumstances.
Contact an Oak Park Bankruptcy Lawyer Today
Do you have questions about liquidation bankruptcy or reorganization bankruptcy? Or are you trying to determine your eligibility for a specific type of bankruptcy? Whether you have initial questions or concerns about the consumer bankruptcy process or you need assistance with a personal bankruptcy case, one of the experienced Oak Park bankruptcy lawyers at our firm can talk with you today. We have years of experience representing consumers in Illinois in consumer bankruptcy and consumer protection cases. Contact the Emerson Law Firm today to learn more about how we can help you.
See Related Blog Posts:
Top Things to Consider About Student Loans and Bankruptcy
Checklist for a Chapter 7 Bankruptcy
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