| Chapter 7 Bankruptcy
Chapter 7 is the most common form of bankruptcy. It is a liquidation proceeding in which the debtor's non-exempt assets, if any, are sold by the Chapter 7 trustee and the proceeds distributed to creditors according to the priorities among creditors established in the Code.
Chapter 7 is available to individuals, married couples, corporations and partnerships. Individual debtors get a discharge within 4-6 months of filing the case.
If there are assets which are not exempt, the trustee takes control of those assets, sells them and pays creditors as much as the proceeds permit.
Any wages the debtor earns after the case is begun are the debtor's, beyond the reach of creditors who had claims on the date of filing.
Filing Chapter 7
The case is begun by filing the official petition, schedules and statement of financial affairs. These forms prompt you to list all of your assets and all of your debts, along with some recent financial history. This is the most important and most time consuming part of a bankruptcy filing
It is important that every creditor is listed in the schedules with an accurate mailing address. You must list all of your debts, even if the debt is non dischargeable or if you intend to reaffirm the debt.
The schedules also list your property, any debts secured by that property, and the sale value of the property. "Property" here means "assets" or "possessions", not just real estate. More on property in bankruptcy. Your choice of exemptions is made on one of the schedules.
The schedules are signed by the debtor under penalty of perjury.
The schedules are filed with the bankruptcy clerk in the district in which you live, or have lived for the greater part of the last 180 days.
For most purposes the rights of the debtor and the creditors are those that exist on the day the case is filed. All of the proceedings in bankruptcy after the filing relate to the situation as it was on the day the case was filed.
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