Consumer Chapter 7 bankruptcy cases comprise the majority of all bankruptcies filed nationwide. A Chapter 7 bankruptcy is a proceeding filed by an individual debtor or joint debtors (husband and wife) in which there would normally be no assets available for a bankruptcy trustee to administer for distribution.
This is known as a consumer no-asset Chapter 7 bankruptcy proceeding. In a consumer no-asset Chapter 7, the debtor seeks the fundamental goals of debtor relief. The first goal is to claim all or substantially all assets owned as exempt, and therefore, free from the reach of the bankruptcy court, the bankruptcy trustee, or creditors. In plain English, the debtor gets to keep exempt property.
The other goal of debtor relief is to receive a discharge from those amounts owed to creditors. Discharge is the term used to describe the release from a debt that a debtor receives in a bankruptcy proceeding. The debtor’s ability to achieve the two goals of exempting property and obtaining a discharge makes up the fundamental debtor relief provided for by the Bankruptcy Code. These elements permit a debtor to obtain a fresh start in the debtor’s financial affairs.