Facts About Chapter 7
Chapter 7 bankruptcy is that section of the U.S. Bankruptcy Code that deals with asset liquidation, which means the selling of all non-exempt assets by a court appointed trustee, who applies the proceeds of the sale to pay your creditors. In return, a debtor receives a discharge, which releases a debtor from all dischargeable debts, and orders creditors to forever stop their attempts at collection of the discharged debts.
Once a debt is discharged, a debtor is forever relieved of the obligation to pay a debt. Some debts cannot be discharged. A few examples include certain taxes, alimony, child support, student loans, and debts incurred as a result of defrauding or misleading a creditor.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has changed a number of the eligibility requirements to file a petition for protection under Chapter 7.