Definition of Chapter 7

Chapter 7 of the US Bankruptcy Reform Act deals with involuntary liquidation and provides for a court-appointed administrator. [1]

Under Chapter 7, an applicant is required to sell all non-exempt property, and the resultant proceeds are then distributed to the creditors. Of course, in many cases where Chapter 7 is utilised, the debtor has no assets to liquidate. Chapter 7 is the most common form of bankruptcy filing, as it is the procedure most often employed by individual debtors. [2]

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