Chapter 7 Bankruptcy FAQ

Questions:

• What is Chapter 7 bankruptcy?
• I've heard it's harder to qualify for Chapter 7 bankruptcy now. Is this true?
• Will all of my unsecured debts be wiped out in Chapter 7 bankruptcy?
• If I'm current on my mortgage, can I keep my home in a Chapter 7 bankruptcy?
• I don't own a home, but will I have to give up other property if I file for Chapter 7 bankruptcy?

Answer:

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy -- also called "straight" or "liquidation" bankruptcy -- is designed to give you a fresh start. It wipes out most types of debt, and in return the bankruptcy trustee sells (liquidates) your nonexempt property in order to provide partial repayment to creditors. But because most people have very little property that is not exempt, most Chapter 7 bankruptcy filers end up keeping most or all of their property. To learn more about Chapter 7 bankruptcy, see Nolo's article A Chapter 7 Bankruptcy Overview.