What is Chapter 7 Bankruptcy?

Chapter 7, the most common type of bankruptcy, is known as a liquidation bankruptcy, total bankruptcy, or the clean-slate bankruptcy; either individuals or businesses can file it. When filing for Chapter 7 bankruptcy, the court will appoint a trustee to oversee your case. The trustee’s job is to sell your non-exempt assets: these assets can include clothing, cars, equipment used for work such as tools, and household furnishings, and use the proceeds to pay off your creditors. In most Chapter 7 cases, the debtor does not have any non-exempt assets, so the trustee will not sell any property. If your property value is less than the exemptions available, your case is a ‘no asset’ case, and you can keep the property and lose the debt.


Chapter 7 bankruptcy is a type of bankruptcy that allows individuals to discharge their debts. In order to qualify for Chapter 7, your income and debt will be subjected to a ‘means test’. The means test is used to determine if your income is low enough that you are unable to repay your debts. If you do not qualify for Chapter 7 protection, filing for Chapter 13 may still be an option.

Filing for bankruptcy erases much of your debt. However, you will remain responsible for the debts including child support, spousal support obligations, student loans, and most unpaid taxes are all examples of debts that cannot be discharged in bankruptcy. As a result, it is important to understand what types of debt will still be owed even after you file for bankruptcy before you make the decision to file.

Canupp Law office is here to help you navigate this difficult process. Please contact us; we can recommend the best course of action before we proceed.

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