Chapter 7

Chapter 7 is a bankruptcy proceeding in which the filing entity goes out of business and liquidates its assets. The court appoints a trustee to liquidate the assets of the business, which are then used to pay secured creditors, followed by unsecured creditors. Both businesses and individuals can declare Chapter 7 bankruptcy. An individual filing for Chapter 7 bankruptcy can have most debts discharged by the court, though alimony, child support, and certain taxes and student loans will survive the bankruptcy and remain obligations of the individual.

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Corporate Bankruptcy