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Chapter 7 liquidation and exemptions

Ohio residents who are suffering from debt problems come from all walks of life — literally. Some individuals have high paying jobs and live a relatively luxurious lifestyle. Other individuals are suffering to make ends meet, and living below the poverty line. Truly, it does not matter how much money you have, or what your wealth status happens to be, if you have borrowed money, you are at risk of falling into a debt problem.

Fortunately, for people who are in dire financial circumstances and unable to climb out of their debt situations, Chapter 7 bankruptcy proceedings may be a viable solution to their problems. However, Chapter 7 bankruptcy — also known as "liquidation" — does involve the liquidation of personal assets, which are sold in order to free up cash to pay off creditors. After the liquidation is complete, and the cash has been dispensed to creditors, any remaining debts covered under the bankruptcy (that were not paid off by the cash) bill be dissolved.

The fact that debtors have to liquidate their assets is particularly frightening for most people. We love our possessions — many of them have sentimental value — and no one likes to give their possessions up unless they have no other choice. In this regard, though, Cincinnati debtors should remember that many of their personal assets will be protected from liquidation as a result of exemptions.

What kind of assets will be exempt in your Chapter 7 filing? In some cases, debtors will be protected from needing to sell their homes, but not in all cases, so it is important to speak with a bankruptcy attorney about your individual homeownership situation. Exemptions may also apply to your primary automobile and a wide variety of your personal property, including: clothing, home furnishings, jewelry, appliances, family heirlooms and more.

In all cases, exemptions do have their limits. However, a skilled bankruptcy attorney can help Chapter 7 filers navigate the process of identifying which of their possessions will be exempt from liquidation. An attorney will also try to save as many of your assets and possessions as possible by making legal arguments to qualify possessions as exempt during bankruptcy proceedings.

Source: FindLaw, "Bankruptcy Exemptions: Chapter 7," accessed May 12, 2016

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