Getting out from under debt can be a long and difficult process. No matter what path a person chooses to achieve debt relief, they may first wish to consult with a bankruptcy attorney to better understand the bankruptcy process. Some Tennessee residents may have misconceptions about how the bankruptcy process works, particularly when it comes to liquidating their assets through Chapter 7 bankruptcy.
When a person liquidates their assets in Chapter 7 bankruptcy, they effectively sell the items they own in order to get money. That money is then used to pay off the individual’s creditors. However, the bankruptcy process is not intended to leave a debtor without anything on which to build their new life. Certain items may be protected, or exempt, from the bankruptcy process.
For example, debtors may keep a reasonable amount of clothing, vehicles that do not exceed a certain value, and necessary household goods and items. They may retain some of the value of their home, their pensions, and even any public benefits they have saved in their financial accounts. This list is not comprehensive and is offered to demonstrate the types of exemptions that debtors may use under Chapter 7 bankruptcy.
Debtors who use Chapter 7 bankruptcy must meet certain requirements in terms of their wealth to qualify for the legal process. Those who do not qualify may be able to use Chapter 13 bankruptcy instead. Bankruptcy may not be for all debtors and legal counsel should be sought by those who have questions.