Chapter 7 bankruptcy is one of the most common ways that people take care of debts they can’t afford to pay. However, many people don’t file for Chapter 7 bankruptcy when they should because they’ve heard they might lose everything they own in the process. If you’re looking for ways to handle debts, you should always talk to a Chapter 7 bankruptcy attorney about the process and how it might affect your life.
Chapter 7 is often called the “liquidation” bankruptcy, and liquidation means taking assets and giving them out to creditors. If you have property that is liquidated, it means:
For example, if you have an art collection, the trustee could sell the art and give the proceeds to pay off certain debts that you have before your bankruptcy case is finished.
The law knows that it wouldn’t make sense if everyone who filed for bankruptcy was left with nothing. For this reason, the law includes exceptions – which are called “exemptions” – that protect certain types of property and assets from liquidation.
Exemptions are different from state to state. In Michigan, you get to choose between the exemptions set out in state law or those in federal law. Our attorney can review the types of property you have and help decide which set of exemptions is best for you, as you can’t mix and match.
Some exemptions under Michigan state law include:
Note that the federal exemptions are different, and those include a wildcard exemption that you can apply to anything you want to protect up to a certain amount.
In many cases, bankruptcy filers can apply exemptions in a way that protects most – if not all – of their property and assets. This means that you could file for bankruptcy, get most of your debts wiped out, and lose minimal property or no property at all. Never let “liquidation” scare you out of learning about bankruptcy, because the help of the right attorney can go far in understanding how Chapter 7 works and making the decision whether to file a case.
If you have concerns about how Chapter 7 bankruptcy will affect your life and your property, you are not alone. The good news is that you can protect most of your property with the help of a skilled bankruptcy attorney like Karen E. Evangelista. If you want to learn about your options and how the bankruptcy process works, please contact us for a free meeting today.