Bankruptcy and Liquidation
The term “liquidation” is often applied to Chapter 7 bankruptcy, but what does this mean, and what does it look like in practice?
To understand this in context, you should first know that when you file a Chapter 7 bankruptcy petition with the Court, a trustee is appointed to review your case. It is this trustee’s job to review your assets, as they have been disclosed in your bankruptcy schedules, and determine if there are any items of non-exempt property that they can take and liquidate for the benefit of your creditors.
It is the job of this trustee to diligently seek to acquire assets, and they are self-motivated, as they keep a portion of the amount of assets they turn over in the cases they have been assigned to. Keep in mind, this is not a government bureaucrat that is seeking to rubber stamp every case that comes across their desk; rather, the acquisition of assets from bankrupt debtors is in large part how they make their living and livelihood.
This is also one of my primary roles upon being hired: specifically, the protection of your assets. Embedded in the Ohio Revised Code are exemptions that can be used on personal property, residences, and vehicles. Exemption planning is a critical function of a good bankruptcy attorney, and I do everything in my power to protect the possessions of my clients.
When there are non-exempt assets in a case, a bankruptcy client does not automatically have to forfeit these items. I can negotiate an “equity buyback” on your behalf, so that you get to keep the asset you wish to protect, and the trustee still receives money to split amongst your bona fide creditors. I put together well thought out offers on my clients’ behalves, so that the process can be a smooth one.
Dialogue between attorney and client is of paramount importance in the equity buyback process. I will never propose a cash offer to a trustee without my client’s full authorization and consent.