Chapter 7: Liquidation of Debts
Chapter 7 is designed for debtors with financial difficulties that do not have the ability to pay their existing debts.
Under chapter 7, depending on the size of your estate, you are entitled to exempt a certain amount of your property. In fact, many debtors are able to keep everything that they own. However, when there is a large estate, a trustee will take possession of your property.
Still, you will be able to use your exemptions in order to have items you need for a fresh start. The trustee then liquidates the remainder of the property and uses the proceeds to pay your creditors according to the priorities of the Bankruptcy Code.
The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, your are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, your discharge may be denied by the court, and the purpose for which you filed the bankruptcy petition will be defeated.
Even if you receive a discharge, some debts are not discharged under the Law. Therefore, you may still be responsible for such debts such as certain taxes, student loans, alimony and support payments, criminal restitution, and debts for death or personal injury caused by driving while intoxicated from alcohol or drugs.
Under certain circumstances, you may keep property that you have purchased subject to valid security interests. Your attorney can explain the options that are available to you.
