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Chapter 7

Chapter 7 of the Bankruptcy Code is entitled “Liquidation” and is found in Title 11 of the United States Code. 11 U.S.C. 701, et. seq.

Table of contents for this topic:


Chapter 7 procedure

A Chapter 7 bankruptcy case begins with the filing of a petition. E.g., 11 USC 301 and Bankruptcy Rule 1002 (voluntary cases). The debtor then files financial disclosure documents and, a month or two after the case began, meets with the Chapter 7 trustee and any creditors who appear to answer questions.

The Chapter 7 bankruptcy involves two conceptually different activities:

First, individual(1) debtors are seeking a discharge. Creditors have approximately two months after the trustee meeting to request that a debtor not receive a discharge or that a particular obligations be excepted from the discharge.

Second, the trustee is seeking to recover and liquidate any substantial non-exempt assets to create a bankruptcy estate from which to make a distribution to creditors.

The case is closed once:
  • (a) the Court has (i) issued or denied a discharge and (2) made a ruling on any request for a determination regarding the dischargeability of any debts and
  • (b) the trustee has either (i) determined that there are no assets for distribution or (ii) distributed any assets the trustee has recovered.
Thus, it is possible for a case to remain open for quite some time after either the debtor has a discharge (case remains open for trustee to administer assets) or the trustee has made a "no distribution" determination (case remains open for court to rule on a request that the debtor be denied a discharge or that a certain debt be excepted from the discharge).

Structure of Chapter 7

Chapter 7 is divided into five subchapters:
  • I - Officers and Administration
  • II - Collection, Liquidation, and Distribution of the Estate
  • III - Stockbroker Liquidation
  • iv - Commodity Broker Liquidation
  • V - Clearing Bank Liquidation


See generally Bankruptcy Discharge

The Chapter 7 discharge is found at 11 USC 727.


Main topic Bankruptcy Reaffirmation

A Chapter 7 debtor may formally "reaffirm" a debt and, thereby, except it from the general Chapter 7 discharge.

See also

See also

External links



1 : Entities cannot receive a Chapter 7 discharge. 11 USC 727(a)(1).

Topic revision: r8 - 23 Sep 2010, WikildBStaff5
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