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A brief overview of Chapter 7 bankruptcy

For many in California, financial strain has reached the point where filing for bankruptcy is the best possible solution. There are several choices when preparing to file, but Chapter 7 is the option that most people consider, because it is the type of filing that leads to the elimination of many forms of unsecured debt. The following information is given to give readers a very basic overview of the Chapter 7 bankruptcy process.

The first step involves determining if a consumer meets the requirements to file this type of bankruptcy. This is known as the means test, where an individual's financial circumstances are evaluated to see if their income and debts meet the requirements for this type of filing. The bankruptcy is initiated when the consumer works with an attorney to prepare the required paperwork and the matter is filed in court. The cost of a Chapter 7 bankruptcy can vary, depending on the complexity of the case.

Once the paperwork has been filed, the debtor will be required to answer questions about his or her financial standing under oath. Any collections actions on the part of creditors will be halted. A trustee is appointed, and that individual will sell off certain assets in order to pay back creditors. Each case is unique, and there are many instances in which there are no assets held that are worth the effort and expense of liquidation.

In general, the process takes between four to six months to complete, although individual circumstances vary. At the end of that process, many unsecured consumer debts will be eliminated through a process known as discharge. This means that the debts will no longer be owed, and there will be no obligation to pay. This is the outcome that leads many California residents to choose Chapter 7 bankruptcy over other available options.

Source:, "Should I File for Chapter 7 Bankruptcy?", Jessica Whitmore, Jan. 9, 2015

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