Tue Jul 29 2014   
 

Bankruptcy Law Research Guide:
Chapter 7 Bankruptcy

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy involves liquidation of a debtor’s assets. The debtor turns over all nonexempt assets to the bankruptcy trustee who sells the property and distributes the proceeds to creditors. In exchange, the debtor is discharged from all dischargeable debts. In reality, most Chapter 7 filers have no non-exempt assets, so no sale of assets will occur in most Chapter 7 bankruptcies.

What type of property is exempt for purposes of liquidation?

Certain property of an individual debtor is protected from the claims of creditors because it is exempt under federal bankruptcy law or the state law of the debtor’s home state. 11 U.S.C. § 522(b).

See the United States Bankruptcy Court for the District of Arizona Exemptions in Arizona website for information on Arizona exemptions.

How much does it cost to file a Chapter 7 bankruptcy?

The filing and administrative fee to file a Chapter 7 bankruptcy is $299.00, effective April 9, 2006. You can check to see if fees have changed here: www.uscourts.gov/bankruptcycourts/fees.html.

How long does it take to complete a Chapter 7 bankruptcy?

After filing, it generally takes between four to six months to complete the bankruptcy and receive a discharge.

Who is eligible to file for Chapter 7 bankruptcy?

The law about Chapter 7 eligibility has changed. See the Recent Changes page for more information.

What is the process?

The process is described in detail on the United States Bankruptcy Courts Bankruptcy Basics, How Chapter 7 Works website.

What type of property is exempt for purposes of liquidation?

The Bankruptcy Code allows an individual debtor to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state. 11 U.S.C. § 522(b).

Many states have taken advantage of a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between a federal package of exemptions or the exemptions available under state law.

Page Updated:  6 November 2008