People who are drowning in debt often want to find a way to seek a fresh start. They may try to make payments on their medical bills, credit cards and other debts for a while but then realize it’s not possible to keep up and still pay for life’s necessities.
If you’re in this position, you may decide to explore the possibility of filing for bankruptcy. Chapter 7 bankruptcy is one of the options that you have. When you’re reviewing this type of bankruptcy, you may notice that it’s deemed a liquidation bankruptcy and wonder what that means for you.
Meaning of liquidation bankruptcy
On paper, a Chapter 7 bankruptcy is meant to liquidate, or sell, a person’s non-exempt assets so the bankruptcy court can pay off as much of their debt as possible. There are many assets that are exempted from that process.
In reality, people who qualify to file a Chapter 7 bankruptcy, which requires them to pass a means test, don’t often have enough non-exempt assets to liquidate to make it worth the trustee’s time and effort to sell any of this. Because of this, it’s unlikely that a person who files this type of bankruptcy will lose any assets. Yet, it’s a good idea to speak to your legal representative to determine what, if any, assets might be liquidated by the bankruptcy trustee, just to be safe.
Exempt assets in Mississippi
Mississippi opted out of the federal exemptions for a Chapter 7 bankruptcy. This means that filers automatically receive the exemptions set by the state. These include:
- Homestead: Up to $75,000 in home equity for a homestead up to 160 acres or $30,000 in equity for a mobile home
- Retirement accounts, pension plans, education savings funds: Funds added more than one year prior to filing are exempt
- Personal property: Up to $10,000 in equity based on the as-is cash value
- Public benefits: Unemployment, government benefits, VA disability, Social Security payments
Filing for Chapter 7 bankruptcy is a major step, but it’s one that can potentially provide you with a fresh financial start. If this is something you realize is right for your situation, seek out legal assistance to help you protect your rights and ensure that you understand your responsibilities.