Chapter 7 bankruptcy is the fastest way for individuals, married couples and businesses to discharge unsecured debts. When the process moves forward without any significant complications, filers can often complete Chapter 7 bankruptcy in less than half a year.
Unlike Chapter 13 bankruptcy, which requires a lengthy repayment plan intended to reduce debts before the discharge, Chapter 7 bankruptcy does not require any monthly payments from the filer. Instead, the courts may sometimes require that they liquidate certain assets and use the funds from the sale of those assets to pay their creditors.
Is property liquidation a universal requirement in Chapter 7 bankruptcy cases?
People often avoid liquidation
If those filing for personal bankruptcy had to eliminate all of their valuable assets to qualify for a discharge, bankruptcy could very well worsen their financial circumstances. Thankfully, there are exemptions available.
Filers can protect home equity, vehicles and other necessary resources by using exemptions. Most bankruptcy filers can preserve all of their assets, completely bypassing the need to liquidate any resources.
Tennessee is an opt-out state, which means that filers can only use state exemptions, not federal exemptions. Even without the choice of two different sets of exemptions, many filers can preserve their most valuable resources during Chapter 7 proceedings. Those who cannot may need to review their resources and debts carefully before moving forward with a filing.
Discussing current assets and debts with a Chapter 7 bankruptcy attorney can help people determine if their property is at risk. Exemptions allow people to discharge their debts while protecting the assets they need to rebuild financially after a bankruptcy discharge.