Browse terms
The bankruptcy process
Chapter 7
Chapter 7 is the chapter of the Bankruptcy Code that provides for liquidation: a trustee may sell a debtor's nonexempt property and pay the proceeds to creditors. 1
Talk to a lawyerHow it works
Individuals, partnerships, corporations and other business entities can file under Chapter 7. For individuals, a means test is used to decide whether the filing is presumed to be an abuse. If it is, the case may be dismissed or converted, usually to Chapter 13. 1 2
An impartial trustee is appointed to run the case. When all of a debtor's assets are exempt or subject to valid liens, the trustee normally files a no asset report and unsecured creditors receive nothing. 1
The meeting of creditors is held between 21 and 40 days after the petition is filed. In a typical case, the discharge order is issued about 60 to 90 days after the date first set for that meeting. 1
The discharge releases the debtor from personal liability for certain debts. Some debts are generally not wiped out, including alimony and child support, certain taxes and most government-funded or government-guaranteed education loans. 3 1
Court fees (effective December 1, 2023) are a $245 filing fee, a $78 administrative fee and a $15 trustee surcharge, $338 in total. 4
Common questions
Will I lose everything I own?
What if I cannot pay the court fees?
With the court's permission, individuals may pay in up to four installments. The court may waive the fees if the filer's income is below 150% of the poverty level and the filer cannot pay even in installments. 1
Does a lien go away in Chapter 7?
Not automatically. A secured creditor may still be able to take back the property that secures its loan after a discharge. 1
Sources
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