Liquidation Bankruptcy
Chapter 7 of the Bankruptcy Code
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Chapter 7 is known as liquidation bankruptcy. It is available to individuals and business entities. The debtor submits a list of all assets and liabilities to the Bankruptcy Court. Certain assets are exempt and the debtor may keep them free and clear. The trustee converts the non-exempt assets into cash and pays the creditors. The debtor begins again with his exempt property and no debts. This is the debtor’s "fresh start." Certain debts, however, are not dischargeable and follow the debtor into his fresh start.
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