Chapter 7 Bankruptcy​

The Chapter 7 Bankruptcy is often called the “straight” bankruptcy. The purpose of Chapter 7 is to help an individual get a “fresh start.”

At the outset of a Chapter 7 proceeding, the court appoints a trustee. The trustee’s job of the trustee is to gather the debtor’s non-exempt assets if any, and sell them to pay off a portion of the creditor’s claims. Because both Texas Exemptions and Federal Exemptions are so broad, most cases do not have any personal property that is sold. Chapter 7 Bankruptcy can also be used to help a business obtain debt relief by liquidating its assets and terminating its operations.

When an individual debtor receives a discharge in Chapter 7, the bankruptcy will eliminate the debtor’s personal liability on dischargeable debts, and the debtor gets a FRESH START. The discharge will not extinguish a lien on the property, which means an IRS lien will survive a Chapter 7 discharge. Some debts are not dischargeable under Chapter 7, such as student loans, certain income taxes, payroll taxes, and debts obtained by fraud.