Both Chapter 7 bankruptcy and Chapter 13 bankruptcy provide you protection from your creditors and a discharge of certain kinds of debt. In Chapter 7 bankruptcy, the focus is on the discharge.
Here’s what usually happens: You file your petition (which is a collection of documents some fifty pages long) with the court. About a month later, you go to a hearing before the Chapter 7 trustee, and then following a two-month notice period after that, the court issues a discharge order.
There are different kinds of debt:
Chapter 7 bankruptcy is “liquidation bankruptcy.” That means the Chapter 7 trustee is empowered to liquidate your assets and distribute them to your creditors. However, the law also provides for certain “exemptions” from liquidation. The law puts your assets into different categories and sets different limits on them. If your assets are worth less than those limits, they are exempted from being liquidated. Most people who file Chapter 7 bankruptcy cases have assets below those limits.
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