CHAPTER 7
- The most common form of bankruptcy.
- Available to individual debtors and married couples.
- Available for business entities (such as corporations) that are not continuing in business.
- For most individuals and couples, there are income requirements for filing.
- A trustee is appointed by the Court. The trustee conducts a meeting to question the Debtor or Debtors in each case where the trustee asks questions about their income, assets and other finances. The trustee is responsible for the assets in a bankruptcy estate (created by the filing of a bankruptcy case), determines whether to liquidate assets and attempts to obtain the maximum values for the assets.
- Once the case is filed, individual and married debtors typically receive a discharge within 90 to 120 days of filing. The trustee may take longer to complete the liquidation of the Debtor’s assets.
- Individual and married debtors are often able to retain assets, such as cars and homes, where money is owed as long as they are able to make the payments and, in some instances, agree to continue to be legally responsible to do so.
- Individuals and married debtors are able to keep assets that can be protected by exemptions provided for by law to protect necessary assets.
- A Chapter 7 debtor may lose control over such assets as businesses, funds they are owed and lawsuits the debtor has filed against others or has the right to file against others.
- Debtors typically lose control over any tax refunds due them at the time of filing and may lose some all of their tax refund for the year during which their bankruptcy case is filed.
- The assets of businesses filing for bankruptcy can be liquidated to pay creditors.
- A Chapter 7 is inflexible as it is difficult to dismiss a bankruptcy case unless the trustee and the creditors agree. In many instances, a Debtor can convert to a different Chapter, where appropriate.
- In most instances, a Chapter 7 bankruptcy is the least expensive form of bankruptcy in terms of attorneys fees. The filing fee is $306.00.