Chapter 7 / Debt Liquidation
Chapter 7 is a federal bankruptcy law enacted by Congress to provide a means for individuals, married couples or sole proprietors in financial difficulty to achieve a fresh start. Chapter 7 allows individuals to discharge (not pay) unsecured debts, keep many assets, and start over.
Unsecured debts include many but not all purchases made on credit cards. Filing under Chapter 7 allows you to keep certain assets while starting over. In exchange, the debtor surrenders the non-exempt assets, if any, to be liquidated for the benefit of creditors. Chapter 7 does not discharge student loans, certain IRS debts, family obligations, or criminal obligations.
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)
Before filing bankruptcy, you must take a credit counseling course. This new law was implemented in 2005. It was passed by Congress April 14, 2005 and signed into law by President George Bush on April 20, 2005.
The second course will need to be taken after filing of the bankruptcy and is due around your mandatory court date.