Legal Definitions - Chapter 7 bankruptcy

Chapter 7 bankruptcy is a legal process that allows individuals and businesses to eliminate their debts and start fresh. It is the most common form of bankruptcy in the United States. When a debtor becomes insolvent and files for Chapter 7 bankruptcy, their assets are sold to pay off their creditors. The proceeds from the sale are divided among the creditors based on their priority.

Businesses file for Chapter 7 bankruptcy when they are unable to achieve profitability under Chapter 11reorganization. In Chapter 7 bankruptcy, a trustee takes control of the business and sells its assets to pay off its creditors. Secured creditors, who have a collateral interest in the debtor's assets, are paid first. Unsecured creditors, who do not have a collateral interest, are paid next. Stockholders are paid last and only if there is any money left after the secured and unsecured creditors have been paid.

A company files for Chapter 7 bankruptcy. The trustee sells the company's assets and uses the proceeds to pay off the company's creditors. The secured creditors, who have a collateral interest in the company's assets, are paid first. The unsecured creditors, who do not have a collateral interest, are paid next. The stockholders are paid last and only if there is any money left after the secured and unsecured creditors have been paid.

Individuals file for Chapter 7 bankruptcy when they are overwhelmed by debt and unable to pay it off. In Chapter 7 bankruptcy, the individual's nonexempt property is sold to pay off their creditors. The individual is then discharged from their debts, meaning they are no longer personally liable for them.

An individual files for Chapter 7 bankruptcy. The trustee sells the individual's nonexempt property and uses the proceeds to pay off the individual's creditors. The individual is then discharged from their debts, meaning they are no longer personally liable for them.

To qualify for Chapter 7 bankruptcy, an individual must pass the means test. The means test determines whether the individual is able to pay off their debts through a Chapter 13 repayment plan. If the individual is able to pay off their debts through a Chapter 13 repayment plan, they may be required to file for Chapter 13 bankruptcy instead.

An individual files for Chapter 7 bankruptcy but fails the means test. The individual is then required to file for Chapter 13 bankruptcy instead.

A bankruptcy court may dismiss a Chapter 7 case if the individual's debts are primarily consumer rather than business debts. This dismissal is discretionary and is based on whether the court finds that the granting of relief would be an abuse of Chapter 7.

An individual files for Chapter 7 bankruptcy, but the court dismisses the case because the individual's debts are primarily consumer rather than business debts.