Bankruptcy Chapter 7 Is designed as an orderly,
court-supervised procedure by which a trustee collects the assets of
the debtor's estate, reduces them to cash, and makes distributions
to creditors, subject to the debtor's right to retain certain exempt
property and the rights of secured creditors.
Because there
is usually little or no nonexempt property in most chapter 7 cases,
there may not be an actual liquidation of the debtor's assets. These
cases are called no-asset cases. Usually a debtors with
assets that they wish to keep and that are not covered by exemptions
file chapter 13 bankruptcy.
A creditor holding an unsecured claim will get a
distribution from the bankruptcy estate only if the case is an asset
case and the creditor files a proof of claim with the bankruptcy
court. In most chapter 7 cases, the debtor receives a discharge that
releases the debtor from personal liability for certain
dischargeable debts. The debtor normally receives a discharge three
to four months after the petition is filed.
