What is a Chapter 7 bankruptcy?
January 9, 2012
A chapter 7 bankruptcy is often referred to as a “straight bankruptcy” or a “liquidation bankruptcy”. In a chapter 7 bankruptcy someone is usually able to discharge credit card debt, medical bills, old utility bills, etc. A common myth about Chapter 7 bankruptcy is that a bankruptcy trustee will sell all of your property. That is not true. Consumers are able to keep property which is classified as exempt. It is important to consult a lawyer to ensure that your property is exempt, and your alternatives to dealing with unexempt property.
A Chapter 7 banruptcy generally lasts 3 – 4 months. Most people emerge debt-free and retain most or all of their assets.
One important thing to remember about a Chapter 7 bankruptcy is that once it is filed, there is no right to dismiss it. So if a trustee discovers unexempt property after the case is filed, that property may be sold and the proceeds used to repay some or all of your debt. This is why it is critical to obtain proper legal representation BEFORE filing a Chapter 7 case.