What is the difference between liquidation and reorganization in Chapter 7 Bankruptcy?

When filing for Chapter 7 Bankruptcy in New Hampshire, an individual or business can choose between two options, liquidation and reorganization. Liquidation is the process of a bankruptcy trustee taking over assets and liquidating them. Assets may include things like jewelry, luxury items, stocks, and real estate. The trustee will sell off the assets, and the proceeds are used to repay creditors. The primary benefit of liquidation is that it allows the debtor to discharge their debt quickly and move on with their life. Reorganization is a process by which a debtor can reorganize their debts and create a repayment plan. This plan is submitted to a court, and if approved, creditors receive payments from the debtor over a set period of time. The benefit of reorganization is that it allows the debtor more time to repay their debts and can help them keep some of their assets. In most cases, Chapter 7 Bankruptcy requires the debtor to choose between liquidation or reorganization. Depending on their individual circumstances, either option may be the best choice. Ultimately, it comes down to the debtor’s ability to repay their debt, their overall financial situation, and the type of assets they have.

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What is the difference between liquidation and reorganization in Chapter 7 Bankruptcy?

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