What is Chapter 7 Bankruptcy?

Chapter 7 is a relatively inexpensive and brief legal proceeding, the purpose of which is to eliminate most debts, and provide the petitioner, or "Debtor," a debt free "fresh start."  The case begins by filing the bankruptcy petition.  Schedules attached to the petition must fully disclose information regarding the Debtor's assets, debts, income and expenses.  The Debtor must appear for one hearing, referred to as the "meeting of creditors."  This hearing is conducted by the case administrator, also referred to as the Bankruptcy Trustee, about a month after the case is filed.  The Debtor's property or assets are normally protected by applicable exemption laws.  The Debtor will be released from most debts, assuming there has been proper notice given to the creditor.  Some debts, such as recent tax liabilities, child support or alimony obligations, government insured student loans, and criminal fines or penalties, are not dischargeable in bankruptcy.  A Debtor may reaffirm certain debt (s) making such debt (s) non-dischargeable.  The majority of consumer Chapter 7 cases are uncontested, and conclude with the Court issuing an order of discharge.  The discharge order is a permanent and final injunction against creditors of the bankrupt.  A Chapter 7 discharge for the individual is available not more than once every six years, under the current law.

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