What you need to know about liquidation bankruptcy

Businesses and individuals in Maryland and throughout the country might benefit by filing for Chapter 7 bankruptcy. If you run an organization as a sole proprietor, company and personal assets might be liquidated in such a proceeding. However, in the event that your company is a separate entity, it may be possible to file for either a business or personal bankruptcy.

An overview of the Chapter 7 process

The process of filing for Chapter 7 bankruptcy begins by filing a petition in state bankruptcy court. Once the petition has been received, a trustee will be appointed who will act a liaison between yourself, your creditors and the court. The trustee will determine which of your assets are eligible to be liquidated and how proceeds from the sale of those assets will be distributed. In most cases, assets such as the equity in a primary residence or a retirement account are exempt from being liquidated to satisfy a debt in this type of proceeding.

Not all debts can be discharged

It is important to note that one or more debt balances may remain after your Chapter 7 case has been discharged. If you reaffirm a debt, a creditor has the right to seek payment after the case is over. A debt can be reaffirmed by continuing to make payments or by simply acknowledging that it is still valid.

Filing for Chapter 7 bankruptcy may make it possible to eliminate personal or business credit card or other unsecured debt balances. An attorney may be able to provide more insight into the process of seeking protection from creditor and additional benefits to doing so. For instance, it may be possible to obtain an automatic stay of creditor collection activities that goes into effect when the court receives your petition.