Chapter 7 Bankruptcy

Filing a petition for chapter 7 is appropriate when reorganization is either unachievable or undesired, where liquidation is the best or only course of action, whether for companies or individuals.  That individual or company is called a “debtor,” and is responsible for turning over to a Court-appointed and independent trustee all of the debtor’s assets, other than assets that are exempt under applicable statutes in cases in which the debtor is an individual.  It is the trustee’s task to liquidate those assets, to the extent of achievable value, resolve the amount of all claims asserted, and distribute liquidation proceeds to creditors in the order of priorities set out in the Bankruptcy Code.  The individual debtor receives a discharge and release of all claims against him or her, with certain exceptions (for example, claims for fraud, embezzlement and the like).