Bankruptcy, what is Chapter 7?
If you’re thinking you need some financial relief, and you’re researching your options, you can get pretty confused about all the vocabulary out there. Bankruptcy Code is the federal law that governs the bankruptcy process and is divided into chapters, and each chapter is further divided into sections. That’s where the name of each type of bankruptcy comes from.
Chapter 7 is the single most common bankruptcy chapter filed in the US. Chapter 7 is also called straight bankruptcy or liquidation bankruptcy. It’s the type most people think about with the word “bankruptcy” comes to mind. The court appoints a trustee to oversee your case. Part of the trustee’s job is to take your assets, sell them and distribute the money to the creditors who file proper claims. The trustee doesn’t take all your property. You’re allowed to keep enough property for “fresh start”. The property you keep is known exempt property.
For more information on other types of bankruptcy, check out Chapter 13 Bankruptcy.