In a Chapter 7 bankruptcy, many or all of your debts are wiped out completely by liquidating (selling) nonexempt property and paying off your creditors. However, the court assures that you have sufficient assets to make a fresh start and so some assets (exempt property) are not eligible for liquidation. In most cases, you receive a discharge of all dischargeable debts (see below for definition).

Almost any individual, partnership, or corporation can file a Chapter 7 bankruptcy petition. The debtor must reside, have a domicile, a place of business, or property in the United States. You can file a Chapter 7 bankruptcy petition regardless of whether or not you are employed.

In order to be eligible for Chapter 7, the debtor must satisfy a “means test” (see below for definition). The court will evaluate the debtor’s income and expenses to determine if the debtor may proceed under Chapter 7.

If you filed bankruptcy before, your right to a discharge may be affected.

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There are several kinds of bankruptcy.
Chapter 7 – liquidation of credit card debt primarily with the ability to reaffirm secure debts
Chapter 11 – reorganization for businesses and for individuals with excessive debt
Chapter 12 – reorganization for family farmers
Chapter 13 – reorganization for individuals with a regular source of income who want to save their home from foreclosure

Most individuals and couples file either a Chapter 7 case or a Chapter 13 case.

If you choose to file either of these, you are required to take a Debtor Credit Counseling class prior to filing.

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