CHAPTER 7
Individuals, businesses, and corporate entities can file for relief under Chapter 7. This is categorized as a liquidation bankruptcy in which the debtor hands over the keys to the entire process to a court appointed trustee. Debtors who are ready to wash their hands of their debts and the bankruptcy process may be interested in this chapter.
For a Business
For a business, a chapter 7 bankruptcy includes shutting down operations and selling business assets in order to pay off creditors.
For an Individual
For individuals, a chapter 7 bankruptcy includes selling your personal assets in order to pay off creditors. Individuals can exempt certain property, so it is important to consult an expert to protect as many interests as possible.
Automatic Stay
Filing under Chapter 7 will automatically stop all collection activities under the automatic stay. This is meant to protect you and your interests from demands for payment by your creditors.
Creditors who violate the automatic stay are subject to legal action.
The Process
Within about a month of filing, you, your legal counsel, the appointed trustee, and your creditors will engage in a meeting formally known as a § 341 meeting. This meeting is designed for your creditors and trustee to understand the details of your case, and your answers are sworn under penalty of perjury. Having experienced and attentive legal representation is crucial to the success of a chapter 7 and to ensure that debtors are receiving their legal rights according to the strict guidelines and deadlines associated with bankruptcy filings.
A clean slate
The key benefit of Chapter 7 is wiping out debts and giving borrowers a fresh start.