What to Expect From the Liquidation Process

 Posted on October 15, 2024 in Bankruptcy

Making the decision to declare bankruptcy is never easy. It can be an upsetting experience, even if it is clearly the wisest course of action. Most people choose Chapter 7 bankruptcy, which does involve liquidating your assets. Liquidation refers to the process of selling off your assets to pay back as much of your debt as possible before the rest of it is cleared away. While the idea of liquidation might be intimidating, the reality is rarely as bad as people expect it to be. An experienced Galveston, TX bankruptcy attorney can talk you through what liquidation will be like for you.

Inventorying Your Assets is the First Step in Liquidation 

The first thing your attorney will help you do is inventory your assets if you did not already do this while qualifying for Chapter 7 bankruptcy. This means taking an accounting of everything you own and what it is worth. Even if an asset is probably going to be exempt from the liquidation process, your lawyer will still want to know about it. Most people who qualify for Chapter 7 bankruptcy have very few valuable assets, so this process is often quick and easy. You do not need to inventory every single item you own, but should report anything of value.

What Can I Keep During Liquidation? 

A lot of property is exempt from liquidation. You can keep up to $50,000 worth of personal property if you are a single adult or double that for a family. Most people are able to keep nearly everything based on this exemption alone. You can also keep a few essential items, like a vehicle, things you need for work and medical equipment. Your retirement accounts are generally also protected.

If you have no assets that are subject to litigation, this is called a zero-asset bankruptcy. These are quite common.

What Happens During Liquidation? 

If you do have assets that are subject to litigation, you will be required to turn them over as the court directs you to. Your assets are then auctioned off or sold. The proceeds are distributed to your creditors.

Just because an item you own is subject to liquidation does not always mean it will be liquidated. Creditors and courts generally do not want to bother with low-value items, as selling them off is not worth the hassle.

Contact a Montgomery County, TX Bankruptcy Attorney

The Fealy Law Firm, PC will strive to protect your property during your bankruptcy proceedings. Experienced Galveston, TX bankruptcy lawyer Vicky Fealy is committed to helping people find quick debt relief through bankruptcy. Contact us at 713-526-5220 for a complimentary consultation.