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What is a chapter 7 bankruptcy?

June 28, 2022

By Diane Drain Attorney & Retired Law Professor

A Chapter 7 bankruptcy is a tool that can be used to help people start over.

A chapter 7 bankruptcy is a federal law that allows a person to be relieved (discharged) from paying their obligations by entering bankruptcy. The individual keeps exempt assets, continues to pay on secured items they want to keep (home, car), and turns over all non-exempt assets to the trustee-in-bankruptcy. Some debts, on the other hand, are unaffected by bankruptcy. Section 523 of the United States Code.

While some of the information in this page is relevant to Arizona cases, the majority of it is bankruptcy law that applies to all Chapter 7 bankruptcy cases.

This basic information should help you understand how bankruptcy works, but keep in mind that it does not cover everything you need to know to file Chapter 7 bankruptcy. Video explaining chapter 7 basics.

Chapter 7 bankruptcy is intended to give a person a “fresh start.”

After you’ve liquidated and paid the value of all of your non-exempt assets to your creditors, you’ll be able to eliminate or discharge all of your unsecured debts. Certain unsecured obligations are not dischargeable in a Chapter 7 bankruptcy. Typically secured debts are unaffected by Chapter 7 bankruptcy. That means that if you want to keep your home or car, and there are obligations owed on it, you must make timely payments, or pay the value of the property.


What is Bankruptcy and How Does it Work?

Bradley’s Bankruptcy Basics (link to another website).

By |Published On: June 28th, 2022|Last Updated: July 28th, 2022|

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About the Author: Diane Drain

Diane L. Drain - Bankruptcy LawyerDiane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

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