What is a Chapter 7 Bankruptcy? Do I qualify to file for protection under Chapter 7?
A Chapter 7 Bankruptcy is often referred to as a liquidation or straight bankruptcy. It is a proceeding under the United States Bankruptcy Code (11 U.S.C. §§ 101 – 1532) whereby the debtor relinquishes his or her non-exempt assets to the bankruptcy trustee. The trustee then converts these assets to cash and distributes it to the creditors. In most districts you must undergo a credit counseling course and obtain a certificate before you are eligible to file. Also, under the “new law” you must qualify to be a debtor under Chapter 7. This qualification is income based and is largely determined by whether you fall below the state’s median income level.
