What is a Liquidation Bankruptcy in Ohio?

Chapter 7 bankruptcy is what is called a Liquidation Bankruptcy.  The trustee liquidates all unexempt assets and uses the proceeds to repay whatever possible to your creditors.  However, the Bankruptcy Code allows for generous exemptions.  A skilled bankruptcy attorney will apply these exemptions to your assets and protect them from the bankruptcy trustee.

For instance, each homeowner has a near $20,000 exemption to apply to their primary residences in Springfield, Ohio.  Therefore, if an individual has a home worth $80,000, and the mortgage balance is more than $60,000, then the house would not be liquidated.  If a couple owns a home worth $80,000, and the mortgage balance is more than $40,000, then the house would similarly not be liquidated.

There are exemptions to apply to retirement accounts, automobiles, jewelry, household goods, cash, personal injury claims, trade tools, and many other assets.

Using these exemptions, many Chapter 7 bankruptcies are “no asset” Chapter 7s.  Meaning that no assets are liquidated, and the debtors get to keep every single asset or piece of property that she had prior to filing the bankruptcy.