What Is A Chapter 7 Bankruptcy?

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What Is A Chapter 7 Bankruptcy?

Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. Under Chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership`s or corporation`s debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy.

Other Types of Bankruptcy FAQs

Q: What Is A Chapter 11 Bankruptcy?
A: Chapter 11 is the reorganization chapter available to businesses and individuals that have substantial assets and/or income to restructure and repay their debts. … More
Q: What Is A Chapter 13 Bankruptcy?
A: Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured … More
Q: What Is A Chapter 12 Bankruptcy?
A: Chapter 12 offers bankruptcy relief to those who qualify as family farmers. There are debt limitations for Chapter 12, and a certain portion of the debtor`s income … More
Q: What Is A Chapter 9 Bankruptcy?
A: Chapter 9 is only for municipalities and governmental units, such as schools, water districts, some utility companies and other similar organizations.
Q: What Chapter Should I File Under?
A: Your particular circumstances will determine the best chapter for you to file under. Choosing the appropriate chapter is very important. The decision whether to file a … More