Richmond, Virginia. The chapter of the Bankruptcy Code providing for liquidation, which means the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.
A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.
Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
A bankruptcy attorney can help a debtor with exemption planning in order to protect as many of their assets as possible from liquidation by the trustee. Ronald Page, PLC has experience representing consumer debtors in chapter 7 liquidations.