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Chapter 7 Bankruptcy
Chapter 7 is a section of the federal Bankruptcy Code that provides for outright cancellation of most types of personal debts without a repayment plan and for possible sale of some types of nonexempt property to pay such debts.
Also known as "straight bankruptcy," Chapter 7 is the most simple type of bankruptcy, because it is the process of liquidating property and using the proceeds to repay debts. Often, however, little property is actually liquidated because it is tied up in liens or classified as exempt from liquidation.
When filing under Chapter 7, you are allowed to exempt, or keep, certain property. Whatever property remains is turned over to the court to be sold. If you have few or nonexempt assets, it is likely your debts will be discharged without you having to pay anything.
Although you may file Chapter 7 without the help of an attorney, a good attorney will assist you in filing the proper papers and help you keep as many of your assets as possible, while at the same time helping you to avoid any possible charges of fraud.
A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems. While we cannot explain every aspect of the bankruptcy process, we've listed some of the most frequently asked questions.