Liquidation bankruptcy is one of several names for Chapter 7 bankruptcy in the United States. Chapter 7 bankruptcy is also sometimes referred to as straight or ordinary bankruptcy since it is the most commonly used type of bankruptcy in America. As the name implies, Chapter 7 bankruptcy involves the gathering and selling of the debtor’s nonexempt assets and using the money from the sale to pay back the creditors. Each state allows a debtor to keep a certain amount of their “exempt” assets and then everything else is liquidated.
Like other bankruptcies, it all starts with the debtor filing a petition with the bankruptcy court which includes their assets and liabilities, current income and expenditures, a statement of financial affairs, and a schedule of all contracts and unexpired leases. In addition to these forms or “schedules”, a fee must be included with the filing, which consists of a $245 filing fee, $75 administrative fee, and $15 trustee surcharge.
The main highlights of liquidation bankruptcy or “straight bankruptcy” is that it is typically a much faster process than the other forms, and it is also an excellent way to eliminate future obligations through discharging all unsecured debts.
One important thing to note, is that most debtors lose little property if they actually want to keep it. Because of federal and state exemption laws, the bankruptcy trustee is prevented from seizing any property that is deemed “exempt” by law. When working with a bankruptcy attorney, you will have the upper hand in assuring that you use the laws that give you the maximum amount of exemptions and also use them wisely and strategically. In the end, unless individuals actually want to surrender their property, they won’t when working with a a bankruptcy lawyer In Cincinnati.