Monday, September 21, 2009

Chapter 7 Liquidation

A voluntary chapter 7 bankruptcy proceeding is typically initiated by the debtor. An involuntary chapter 7 bankruptcy may be filed by the debtor's creditors under certain circumstances.

In a typical chapter 7 case, a bankruptcy trustee is appointed. One of the chief duties of the trustee is to liquidate a debtor's nonexempt assets and distribute the proceeds to creditors. In exchange for surrendering these assets, an individual debtor ordinarily receives a discharge from personal liability for most pre-bankruptcy debt. Plus an individual debtor typically keeps assets acquired after the filing for use in his or her "fresh start." Thus, an individual debtor's prior economic life essentially ends with the filing of the chapter 7 bankruptcy. A second financial life begins. Obtaining a bankruptcy discharge is usually an individual's primary incentive for filing a voluntary chapter 7 case. Source: American Bankruptcy Institute.

Warmest Regards,

Bob Schaller

Your Bankruptcy Advisor Blog
By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm

Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys.

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