In this issue of Community Banker we discuss the simplest and most common for of bankruptcy.
The November/December issue of the Community Bankers’ Advisor provided lenders a general overview of the bankruptcy process. This issue summarizes Chapter 7 bankruptcy, the simplest and most common form.
In a Chapter 7 case, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of those assets to pay creditors; priority is given to those creditors with valid liens. In addition, the debtor may keep certain “exempt” property. Most debts are discharged in a Chapter 7 (most but not all – there’s no discharge for student loans, child-support payments, unpaid taxes, etc.).
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