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What is a Chapter 7 bankruptcy?
Chapter 7 bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. Within 4 to 5 months after filing a Chapter 7 bankruptcy, the debtor receives a discharge (i.e., a "wiping out") of all dischargeable debts.
Who can file a Chapter 7 bankruptcy?
The debtor must reside or have a domicile, a place of business, or property in the United States or a municipality. The debtor must not have been granted a Chapter 7 discharge within the last 8 years. In addition, the debtor must not have had a bankruptcy filing dismissed for cause within the last 180 days. For the most part, Chapter 7 bankruptcy is limited to individuals who earn less than the State’s median income for their family size.
What are the most common reasons for filing a Chapter 7 bankruptcy?
The most common reasons for consumer bankruptcy are: unemployment; large medical expense; seriously over-extended credit; marital problems and other large unexpected expenses.
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