Chapter 7 bankruptcy of the Title 11 of the United States Bankruptcy Code, also

known as a "liquidation proceeding," is one of the most common forms of bankruptcy today.

Generally speaking, such a proceeding is when a debtor relinquishes all non-exempt property to

a bankruptcy trustee who then sells it for cash to distribute among the creditors. This is done as

a means of relieving the debtor from any and all financial obligations that the debtor is simply

unable to pay. Typically, the court process for a chapter 7 bankruptcy can last approximately 4-6

months.

The costs associated with filing for chapter 7 include a mandatory $245 case filing

fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. After filing a petition,

these fees can be paid to the clerk of the court; however, in certain circumstances the court will

permit individual debtors to pay these fees in installments. The court may even grant a fee waiver

relieving an individual debtor from their obligation to pay these required fees if he or she can

simply not afford to pay. A debtor who fails to pay these fees could face dismissal of their case.

The chapter 7 bankruptcy process begins with the debtor filing a petition for bankruptcy

in a federal court. Along with this petition, the debtor must attach all necessary documentation

illustrating his or her current financial situation. The Official Forms may be downloaded from the

Internet at www.uscourts.gov/bkforms/index.html.

In turn, the court then assigns a bankruptcy trustee to handle the bankruptcy case from

start to finish. The trustee is responsible for liquidating any non-exempt assets, distributing the

proceeds to creditors and conducting the meeting of creditors. The trustee can be considered the

middleman between the court and the debtor.

Upon filing a petition under chapter 7, a debtor can automatically stop most collection

actions against the debtor or the debtor's property through what is called an "Order for Relief".

This means that as long as the stop is in effect, creditors may not seek payment from the debtor.

This is done when creditors receive a notice of the bankruptcy case from the court. However,

any "secured debt" belonging to the debtor, which is property used as collateral for a loan, does

not usually stop collection efforts from creditors if a debtor is behind on his or her payments.

The Meeting of Creditors, also known as the "341 Hearing" refers to the meeting

between the trustee, debtor and creditors. The debtor must attend the meeting and answer

questions honestly regarding his or her financial state of affairs. The trustee is also in charge

of ensuring the debtor understands the overall nature of his bankruptcy petition including the

outcome of the bankruptcy action. Soon after the creditors' meeting, the trustee will report to the

court whether the case should be discharged.

At the end of the bankruptcy process the court will issue a written notice to the debtor

notifying him that he has been discharged of all debts. Those debts that usually survive

bankruptcy, however, include child support, most tax debts, and student loans, and debts that the

court has declared non-dischargeable because the creditor has objected.

A chapter 7 bankruptcy stays on an individuals credit report for 10 years from the date of

filing the petition. In addition, a debtor also has the option of converting a chapter 7 case to a case

under chapter 11, 12, or 13 so long as the debtor is eligible.