Chapter 7 - Liquidation Bankruptcy
A Chapter 7 bankruptcy is also known called a "liquidation bankruptcy". The term "liquidation" is used because a Chapter 7 Bankruptcy Trustee, appointed in to administrate a debtor's bankruptcy, is responsible for collecting and selling the debtor's "non-exempt" assets to pay creditors. Nevertheless, the Bankruptcy Code provides debtor with a number exemptions to protect certain types of property from liquidation. Generally most people who qualify to file a Chapter 7 Bankruptcy can protect most if not all of their property from liquidation by the Chapter 7 trustee.
Under a Chapter 7 bankruptcy, most, but not all, of your debts can be discharged. As an individual, you can lose some of your property (nonexempt assets) but each individual's Chapter 7 bankruptcy is unique.
Types of debts that can not be discharged include:
To qualify to file a Chapter 7 liquidation bankruptcy, a debtor's "current monthly income" must be less than the state median for the debtor's household size. The Bankruptcy Code requires the application of a "means test" to determine whether the debtor qualifies to file chapter 7 bankruptcy.
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