Chapter 7 Bankruptcy- An Overview Of What To Expect

Chapter 7 Bankruptcy— An Overview Of What To Expect

From Mayer and Newton Attorneys-at -Law

Chapter 7 Bankruptcy is often referred to as a “straight” bankruptcy or a “liquidation”. In Chapter 7, any assets not considered exempt under the law (see Section 2) are turned over to a bankruptcy trustee (or administrator). He/she sells the property, and distributes the money equally among the unsecured creditors. In actual practice, however, very few people are required to turn over any property to the trustee. In exchange for turning over any property not considered exempt under the law, the debtor is entitled to a discharge of unsecured debts (with several exceptions–see Section 3). On secured debts, the debtor either reaffirms the debt (continues to make payments), surrenders the property back to the creditor, or redeems the property (making a lump sum payment equivalent to the value of the merchandise).