Chapter 7 Basics

Chapter 7 Bankruptcy

When people think of bankruptcy, they think of the type of bankruptcy provided for in chapter 7 of the code, a liquidation proceeding sometimes called straight bankruptcy. This type of bankruptcy has by far been the most popular type of proceeding for individuals. Although the percentage of debtor’s choosing chapter 7 has diminished somewhat since enactment of the code because of the advantages that chapter 13 offers, chapter 7 continues to be the chapter most frequently utilized, and it remains a lifeline for over 1 million consumer debtors each year.

A no asset case is one in which none of the debtor’s assets are available to be sold for the benefit of unsecured creditors because all of the assets are exempt or encumbered by liens to the full extent of their values.

In a liquidation case, all of the debtor’s nonexempt assets that have significant value are distributed to creditors and the debtor normally receives a bankruptcy discharge. From the beginning of the case until its conclusion, each step in the process is directed toward one or both of these ends. Contact us today if you have more questions.

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