Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” is a legal process designed to help individuals eliminate most/all of their unsecured debts.  It is the most common type of bankruptcy filed representing roughly 60% of all bankruptcy cases filed in the United States. This type of bankruptcy is intended to provide a fresh financial start for those overwhelmed by debt.

Purpose of Chapter 7 Bankruptcy

1. The primary purpose of Chapter 7 bankruptcy is to discharge debts, allowing the individual to emerge from bankruptcy free of the financial obligations that were included in the bankruptcy filing. This process is particularly beneficial for individuals who have limited income and cannot realistically pay off their debts.  Although often referred to as a liquidation bankruptcy, over 90% of these cases annually are considered “no asset” cases for creditors.  The reason most of these cases are considered “no asset” cases is because the individual filing the bankruptcy does not have to pay anything to creditors and retains all their possessions. 
2. How Chapter 7 Works: A Chapter 7 bankruptcy is usually based on a flat fee, meaning you do not pay the attorney hourly but instead pay a set amount for your case.  The attorney, with your assistance prepares all the documents necessary for the bankruptcy, meets with you to go over the documents, files the case on your behalf, appears with you at the required hearing, and handles all other routine aspects of the case to get you through the process so you emerge debt free in around 120 days.