What happens to my assets during a Chapter 11 bankruptcy?

When someone in Virginia files for Chapter 11 bankruptcy, the law requires them to declare all of their assets. This includes all of the person’s property, both liquid and non-liquid. Liquid assets are what can be immediately converted into cash, like bank accounts, stocks, and bonds. Non-liquid assets are things like real estate, cars, or jewelry which need to be sold to produce cash. Once all of the assets have been identified and declared, they become part of a bankruptcy estate. This estate is controlled by a bankruptcy trustee who is responsible for collecting and selling the assets, if necessary, and distributing the proceeds to creditors and other interested parties. Assets that are not necessary to continue with the person’s regular business may be sold to raise funds to pay debts or expenses. However, even in the midst of a Chapter 11 bankruptcy, the debtor may be able to keep some of their assets. Certain assets, such as those with sentimental value, may be exempted from the estate so that they remain with the debtor after the bankruptcy is complete. In addition, Chapter 11 bankruptcy also offers the option of reorganizing debt instead of liquidating assets. If the court approves a reorganization plan, creditors may receive reduced payments, and the debtor may be allowed to keep their assets. Depending on the nature of the bankruptcy, debtors may also be able to negotiate with creditors to pay off their debt in a way that preserves most of their assets.

Related FAQs

What happens to my assets during a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts