6. What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is the traditional form of bankruptcy which only takes three months between the time you file your petition and the time you receive your discharge.

Chapter 7 bankruptcy is called a liquidation bankruptcy. The idea is that when you declare bankruptcy the chapter 7 trustee takes over administration of your assets. If any of your assets are not covered by exemptions, the trustee can take those assets and sell them in order to pay your creditors. In general assets that are under the approximately $25,000 credit limit are exempt, so it only assets that a debtor has beyond that amount that are subject to being liquidated by the trustee.

At the end of three months a debtor who has declared chapter 7 bankruptcy receives his discharge, an order signed by the bankruptcy judge that says all of his debts are erased except for certain kinds of “non-dischargeable” debts, such as recent taxes, student loans and child support.

If you have questions about what kind of bankruptcy is best for you, call Attorney Evan Livingstone at (707) 206-6570 or email him at evanmlivingstone@gmail.com for a free consultation.

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