Chapter 7 Process

​A Chapter 7 liquidation bankruptcy, involves a relatively straightforward process, that typically includes only the following steps: 
  • Decide if you are eligible for Chapter 7 Relief;
  • Participate in Credit Counseling;
  • Complete Required Documents;
  • Meeting of Creditors;
  • Liquidation of Assets; and finally
  • Discharge.

​* Nothing on this page is legal advice, neither does it create an attorney-client relationship of any sort.  The material contained here is for informational purposes only.  Contact us for real legal advice and an opportunity to form a relationship with great attorneys.

Determine Eligibility

Amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a "means test" to determine whether individual consumer debtors qualify for relief under chapter 7. If such a debtor's income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief.

Participate in Credit Counseling

Before a Chapter 7 Bankruptcy can be filed, the debtor MUST participate in a credit counseling program.  See the credit counseling page to get a list of approved credit counseling agencies.

Complete Required Documents

In order to successfully file for bankruptcy, many documents must be filed on your behalf.  It is imperative these forms are completed correctly.  Click the link in order to access the Chapter 7 form packet.  Click here for non-individual Chapter 7 Debtors.

Meeting of the Creditor

The Meeting of Creditors is described in section 341 of the Bankruptcy Code, hence the name “341 Hearing”. It provides for a United States Trustee to convene and preside at a meeting of creditors and directs the Trustee to “orally examine the debtor” in a Chapter 7 case to make sure they are aware of 1) the consequences of filing for bankruptcy, 2) their ability to file a petition under another chapter, 3) the effect of any discharge of debts and 4) the effect of reaffirming any debt.

Liquidation of Assets

Chapter 7 entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor's assets. These cases are called "no-asset cases." 

A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. 

Discharge

The debtor normally receives a discharge just a few months after the petition is filed. 
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