CHAPTER 7

The most common type of bankruptcy filed under the Bankruptcy Code. Essentially, most of the debtor’s debts are eliminated in exchange for pledging all the debtor’s non-exempt property to be distributed to creditors. Cost is usually a few hundred dollars, it takes up to 6 months and does not require many appearances in court. Chapter 7 of the U.S. Bankruptcy Code that empowers a court to appoint a trustee to take over and operate a business that has failed significantly so as to preserve the current assets and prevent or minimize further loss. The debtor turns over all non-exempt assets to the bankruptcy trustee which are liquidated and then distributed to creditors. The hopelessly burdened debtor is then released from those debts and given a fresh start to begin again. It is commonly used by people who have little property except for basic necessities. Most unsecured debt can be eliminated and, within just a few months, a discharge can usually be obtained. Qualification for Chapter 7 is required, which includes completing a means test and filing with a credit counselor.