A Chapter 7 bankruptcy case is one in which the bankruptcy petition is filed under Chapter 7 of the Bankruptcy Code. Under Chapter 7, a Trustee is appointed to sell or liquidate any of the debtor’s “non-exempt” assets or property in order to raise case to make payments to creditors. A Chapter 7 case is sometimes referred to as a “straight bankruptcy” or a “liquidation case”.

A Chapter 7 debtor who cooperates with the Trustee and complies with all of the provisions of the Bankruptcy Code receives a discharge. A discharge is a Bankruptcy Court order that releases the individual from the legal obligation to pay debts. Certain debts, such as child support and some taxes are not covered by the discharge and are known as “non-dischargeable debts”.

Eligibility

Subject to the “means test” established by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, if you reside in or have a domicile, place of business or property in the Unites States, you are permitted to file a Chapter 7 bankruptcy petition.

There are rules that determine “venue,” meaning in which bankruptcy court district you may file the petition. Most individuals must file their Chapter 7 petition where they currently live, or where they lived for the most number of days during the 180-day period immediately before filing the petition.

Before filing a Chapter 7 bankruptcy case, you must receive a briefing from an approved nonprofit budget and credit counseling agency. Under limited circumstances, you may be able to complete the briefing requirement after filing your petition.