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BANKRUPTCY ATTORNEYS!
CHAPTER 7 BANKRUPTCY
What is Chapter 7 Bankruptcy?
The different chapters of bankruptcy refer to portions of the U.S. Bankruptcy code.
Chapter 7 bankruptcy is often referred to as "liquidation." Liquidation involves
selling property that is not exempt from sale so that the proceeds can be distributed
among those the debtor (the person or entity filing bankruptcy) owes (their creditors).
Who Files Chapter 7 Bankruptcy?
Individuals usually file chapter 7 or chapter 13 bankruptcy while businesses that
do not wish to liquidate but instead reorganize and stay in business file chapter
11 bankruptcy. There are eligibility requirements under chapter 7 bankruptcy that
will cause a case filed as a chapter 7 bankruptcy to be converted to a chapter 13
bankruptcy (with the debtor's consent) or be dismissed (if the debtor does not consent
to the change to a chapter 13 bankruptcy). The court first looks to whether the
debtor's current monthly income is more than the median in their state and the debtor
must overcome a presumption that chapter 7 would be abused if they were allowed
to proceed to stay under chapter 7 bankruptcy.
What are the Alternatives to Filing Bankruptcy?
Sometimes people believe that they need to file bankruptcy because they cannot see
a way out of debt -- you may be able to find help through debtor education and credit
counseling. In fact, under the new bankruptcy laws (the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005, to be exact), in many situations, 180 days
before filing bankruptcy the debtor must go through credit counseling in order to
be eligible to file for bankruptcy.