Will You Lose Everything if You File for Chapter 7 Bankruptcy?

 Posted on January 24, 2023 in Chapter 7

Chapter 7 bankruptcy is often referred to as “liquidation bankruptcy.” This nickname gives many potential filers the impression that they will lose all of their property if they take advantage of the debt relief opportunity that Chapter 7 bankruptcy affords. Thankfully, this common misperception is not grounded in reality.

The vast majority of people who are eligible to file for Chapter 7 relief do not own much valuable property. As a result, they do not risk having to liquidate any – or many – of their assets.

The Role of a Chapter 7 Trustee

The most significant benefit of filing for Chapter 7 bankruptcy is that this process allows qualifying non-secured debts to be discharged without repayment. This means that a filer’s eligible debts will be eliminated at the conclusion of their case, even though they have not made any additional direct payments to their creditors.

To better ensure that individuals who could afford to repay their creditors by selling non-essential assets do not take advantage of the system, each Chapter 7 case is assigned a Trustee. This individual assesses which of the filer’s assets are exempt and which are non-exempt. The Trustee is empowered to sell non-exempt assets to repay a filer’s creditors before that filer is granted a discharge.

Chapter 7 Bankruptcy: Eligibility and Exemptions

Chapter 7 bankruptcy relief is only available to individuals and married couples who do not earn much income. This is why most Chapter 7 filers do not own a great deal of valuable property at the time that they seek a bankruptcy discharge.

Most essential property—including clothing, books, equity in a primary automobile, and significant equity in a home—is considered exempt from liquidation. Therefore, if you do not own a great deal of valuable luxury property, you will likely not lose much, if anything, when if you file for Chapter 7 bankruptcy.

Contact a Dedicated San Antonio Bankruptcy Lawyer for More Information

It is important to make informed decisions about debt relief and debt management opportunities. The knowledgeable San Antonio, TX bankruptcy lawyers at Law Offices of Chance M. McGhee can provide you with objective, personalized guidance. That way, you will know that you are making decisions based on facts and that you are benefiting from an approach that focuses on your unique needs, priorities, and circumstances.

Schedule a risk-free, confidential consultation session at no cost today by submitting a contact form on our website or by calling us at 210-342-3400. Filing for bankruptcy can be a confusing, scary process. You do not have to navigate it alone. We look forward to speaking with you.

Source:

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics