Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is often called a liquidation bankruptcy. When you file a Chapter 7 bankruptcy all your property and debts become part of the bankruptcy estate. You may keep under specified federal or state law all the property that law allows a debtor to keep as exempt. Exempt property is property neither the Court, the creditors, nor Trustee can take from you to satisfy your debts. The vast majority of Chapter 7 bankruptcy cases are “no asset cases” which means the Debtor does not have any non exempt property to liquidate for benefit of the creditors. When there is property that is not exempt it is liquidated by a person who is called a Chapter 7 Trustee. The proceeds of the liquidation are then paid to the creditors on a pro rata basis as set out in the Bankruptcy Code. At the conclusion of the case the debtor will receive a discharge of all debts eligible for discharge, the primary goal of the bankruptcy case.