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Chapter 7 is often called liquidation bankruptcy.
In return for having debts discharged, the debtor must turn over to
the Bankruptcy Trustee all property except for certain assets which
Florida Law allows the debtor to keep as exempt. Chapter 7
is commonly used by individuals who want to walk away from their debts
or by businesses that want to terminate their operations and liquidate
their assets. When a debtor files Chapter 7, the
bankruptcy court appoints a person to administer the estate. This
person is called the Trustee. The Trustee sells the property and distributes
the proceeds to the creditors according to priorities established
by the law.
Basically, a Chapter 7 case has 5 stages:
- Getting the debtor into bankruptcy court;
- Collecting the debtor’s property;
- Selling this property;
- Distributing the proceeds of the sale to creditors; and
- Determining whether the debtor is discharged from further liability
to these creditors.
The principal advantage of Chapter 7 is that
the debtor emerges from bankruptcy without any future obligations
on his or her discharged debts.
Disclaimer
To receive more information, you can contact The Florida Bar Association
at The Florida Bar, 650 Apalachee Parkway, Tallahassee, Florida,
32399-2300.
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