When the economy struggles, it can be difficult for a Texas resident to stay ahead of their financial obligations. If they lose their job, take a pay cut, or suffer an unexpected emergency like a health crisis or accident, they may feel an extra pressure to make ends meet for themselves and their loved ones. Not everyone can stay ahead of their bills during difficult financial times. For some, debt grows and becomes insurmountable during times of challenge.
Fortunately, individuals facing serious financial perils have options for securing debt relief, and one of those options may be personal bankruptcy. This post will address Chapter 7 bankruptcy, and specifically the liquidation focus of the process. This post is informational in content, and readers should not rely upon its information as legal or financial advice.
Understanding who qualifies to understand liquidation
There are two forms of personal bankruptcy that most individuals use to secure financial stability – Chapter 7 and Chapter 13. Chapter 13 bankruptcy uses a person’s income to repay their creditors and lower their debt over a period of years. If a person has income to spare, they will likely be moved from Chapter 7 bankruptcy into Chapter 13 bankruptcy.
Chapter 7 bankruptcy is for individuals who do not have any extra income with which to make repayment efforts. They may be unable to pay for their existing needs. Instead of using their income to pay off their debts, Chapter 7 filers may sell their possessions to repay their creditors.
Liquidation as a means to financial freedom
The sale of a person’s property is called liquidation. Bankruptcy laws do not require debtors to sell off all of their property, and bankruptcy attorneys can advise their clients on whether the Texas or federal exemptions better serve their interests in retaining some of their owned items. When a person is able to liquidate their assets and fulfil the terms of their Chapter 7 bankruptcy discharge through that sale, they may achieve a release from the debts that were covered by their bankruptcy proceedings.
Liquidation bankruptcy is not for everyone. An individual or couple must qualify for it before they can enjoy its protections from creditors. Individuals who wish to file for bankruptcy can talk to their trusted attorneys about whether Chapter 7 or Chapter 13 would better serve their needs.