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Chapter 7

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A Chapter 7 bankruptcy is often referred to as “liquidation.” Under this Chapter, the debtor’s nonexempt assets (those not protected by law) are sold and the proceeds are distributed to creditors. However, in the majority of Chapter 7 petitions the debtor’s unsecured creditors receive no payment because the assets of the debtor are usually fully secured (based on a lien), exempt (law allows the individual to keep), or insufficient to pay anything but a fee to the Chapter 7 trustee. Such petitions are generally known as “no asset” cases.

For individual and joint consumer debtors, the Bankruptcy Code imposes a “means test” that evaluates whether those filing for bankruptcy have the ability to pay creditors over a five-year period, as provided for in other bankruptcy chapters. Barring other rules, if the petitioner(s) does not qualify under Chapter 7, the other chapters are still available.

All Chapter 7 cases involve a Chapter 7 trustee. The Chapter 7 trustee is to liquidate the petitioner’s nonexempt assets and distribute the proceeds to creditors.

Once a successful case is completed, the petitioner receives relief from all dischargeable debts. In the majority of Chapter 7 consumer cases, the debtor is able to discharge all unsecured debts, with no further payments being required to creditors.

Chapter 7 cases are generally completed within three (3) months of filing. The process starts with completing a credit counseling course (usually takes about ½ hour online). The individual, couple, or business filing for the bankruptcy then attends one meeting of creditors with a court-appointed trustee. This meeting is generally very quick, and covers the items disclosed in the bankruptcy documents filed with the court. The final step is to complete a second debtor education course (again, generally online).

Chapter 7 bankruptcy cases at the Henshaw Law Office start at the lowest rates in the industry. Call the Henshaw Law Office for a free consultation at (408) 533-1075 today to see whether Chapter 7 bankruptcy is the best solution for you.

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