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Legal Dictionary

Chapter 7

Chapter 7 refers to a specific section of the United States Bankruptcy Code that governs the process of liquidation bankruptcy. Under Chapter 7, individuals or businesses who are unable to repay their debts can seek relief by having their nonexempt assets sold to repay their creditors.

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Frequently Asked Questions

What is the purpose of filing for chapter 7 bankruptcy?

Filing for Chapter 7 bankruptcy allows individuals or businesses to obtain a fresh start by eliminating most of their debts and starting anew. It provides a legal framework for the orderly distribution of assets to creditors and allows debtors to discharge their obligations.

What are the eligibility requirements for filing for Chapter 7 bankruptcy?

To be eligible for Chapter 7 bankruptcy, individuals or businesses must pass the means test, which compares their income to the median income in their state. Additionally, debtors must receive credit counseling from an approved agency within 180 days before filing for bankruptcy.
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