In general, bankruptcy options are available to help protect individuals from overwhelming debt. Chapter 7 bankruptcy is one option for individuals who qualify under the means test that can help them enjoy debt relief and a fresh financial start and future. Chapter 7 bankruptcy allows an individual filing for bankruptcy to eliminate debts by liquidating non-exempt assets to repay them.
Though Chapter 7 is a liquidation bankruptcy process, some assets are exempt from the bankruptcy process during a Chapter 7 bankruptcy. Exempt assets are assets that fall into certain categories, or a wild card category for assets that do not fit into other categories or exceed the limit allowed, and are subject to certain limits. The Chapter 7 liquidation bankruptcy process begins with the filing of a bankruptcy petition. Once the filing party has filed a bankruptcy petition, and automatic stay goes into effect that protects the filing party from collection actions by creditors while the process proceeds.