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CHAPTER 7 INFORMATION
Chapter 7 bankruptcy is sometimes called liquidation bankruptcy -- it cancels your debts, but you might have to let the bankruptcy trustee sell some of your property to repay your creditors. You will get to keep any exempt property, which usually includes household goods and clothing, and similar items.
By filing for bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy court. You can't sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court's consent. However, with a few exceptions, you can do what you wish with property you acquire and income you earn after you file for bankruptcy.
In every Chapter 7, the court appoints a bankruptcy trustee. The trustee's primary duty is to see that your creditors are paid as much as possible on what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid.
At the end of the bankruptcy process, most of your debts are discharged by the court. That means that you no longer owe your creditors, except for:
- debts that automatically survive bankruptcy, unless the court rules otherwise (for example, child and spousal support, most tax debts, and student loans), and
- debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by fraud or malicious acts).