There are different types or chapters of bankruptcy that individuals can file depending on their circumstances. There are certain types of bankruptcy that only apply to businesses and others that are primarily useful for those in specific professions, like farming.
For individuals filing for personal bankruptcy, Chapter 7 and 13 proceedings are the most common. Some people refer to Chapter 7 bankruptcy as liquidation bankruptcy. It may only take a few months after someone files their initial paperwork for the courts to approve the discharge of their unsecured debts.
The law sometimes allows for the liquidation of someone’s non-exempt assets to repay their creditors. But, there are state and federal exemptions that allow for the protection of home equity and other valuable personal property during a bankruptcy. Due to a variety of exemptions and the ways in which the bankruptcy process works, most people who file a Chapter 7 bankruptcy do not end up losing any of their assets whatsoever.
If someone has sizable non-exempt assets that the trustee appointed by the courts could reasonably sell to repay creditors and which are not eligible for protection under the exemption rules, then an individual might face the mandatory liquidation of some of their assets. However, that only occurs in a tiny fraction of cases. The vast majority of those pursuing Chapter 7 bankruptcy will not have any of their assets sold.
For many people who are considering bankruptcy, a review of both their income and their accumulated personal property will influence whether or not liquidation is a concern. In the rare circumstances where it may be possible, people may need to consider a Chapter 13 bankruptcy to protect their assets and maximize the benefits derived from their bankruptcy filing.
Seeking legal guidance and learning more about the rules that apply to modern Mississippi bankruptcy can help those worried about their financial situations feel more confident about the solutions they choose.