What is a chapter 7 bankruptcy case and how does it work?

A chapter 7 bankruptcy case is a proceeding under federal law in which the debtor seeks relief under chapter 7 of the Bankruptcy Code.  Chapter 7 is that part (or chapter) of the Bankruptcy Code that deals with liquidation.  The Bankruptcy Code is a federal law that deals with bankruptcy.  A person who files a chapter 7 case is called a debtor.  In a chapter 7 case, the debtor must turn his or her nonexempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor’s creditors.  In return, the debtor receives a chapter 7 discharge, if he or she pays the filing fee, is eligible for the discharge, and obeys the orders and rules of the bankruptcy court.

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