Chapter 7 Bankruptcy
Chapter 7
Under the US Bankruptcy Code, there are basically three chapters that a consumer debtor can file under. The first is Chapter 7, which pertains to liquidation of non-exempt assets. Liquidation refers to when assets are sold and reduced to cash proceeds, which are then paid out to unsecured creditors. Only non-exempt assets can be liquidated/sold. In Texas there are two exemption schemes, Texas exemptions and federal exemptions. Generally, homeowners with significant equity in their home use Texas exemptions, while renters/new home owners tend to use federal exemptions. Finally, Chapter 7 cases usually last between 90 to 120 days.