Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

Bankruptcy Terms To Know: Liquidation

When you file for some types of bankruptcy, part of the process includes the liquidation of some of you assets. Very simply, you are selling some of your property in order to pay off some or all of your debts.

In personal bankruptcy, Chapter 7 bankruptcy is also known as liquidation. In this form of bankruptcy, a trustee or other appointee of your bankruptcy court will determine if you have assets for liquidation and handle the liquidation process.

It is important to understand, however, that not all of your assets will be liquidated. In many cases, valuables that you owe are exempt from the liquidation process - these assets may include your primary residence, your car, and other personal items or items of necessity. Items that fall into exempt status vary by state, so those considering Chapter 7 liquidation bankruptcy should consult a local attorney for more information about specific state bankruptcy laws.