Liquidating loan definition
The judge can deny the discharge if the debtor failed to keep adequate records, failed to explain the loss of any assets, committed a crime, disobeyed court orders, or did not seek credit counseling.Alimony, child support, and student loans generally cannot be discharged in a Chapter 7 case, nor can most judgments against the debtor for criminal acts.Whether it is a home loan, car loan or student loan, these types of liquidated debts represent an exact dollar amount that must be paid back by the loan's maturity date.For example, if a bank lends you ,000 on a two-year promissory note, the amount due at the loan's maturity date is clear.Individuals, partnerships or corporations can liquidate assets.Here's how liquidation works in the case of bankruptcy.However, the steps preceding liquidation usually involve bankruptcy, which -- at the individual level -- virtually ruins a person's credit for several years, making it very difficult and expensive to borrow money in the future.For businesses, liquidation usually means closing for good and selling off all the assets.
(In some cases, creditors can force a debtor into Chapter 7 by filing the petition themselves.) The debtor must provide the court with financial and tax information, as well as a list of creditors and outstanding debts.
In the end, if a company's stock or bonds are deemed worthless by the bankruptcy court, investors might be able to deduct their losses on their tax returns.
Source: Investing Answers is most often used in discussions about Chapter 7 bankruptcy -- a section of U. bankruptcy law under which companies and individuals liquidate their assets in order to repay their debts.
How It Works Individuals, partnerships or corporations can liquidate assets.
In the case of bankruptcy, when and how a borrower liquidates assets is a big deal.