Word: Chapter 7
Definition:
The chapter of the Bankruptcy Code providing for ‘liquidation,’ selling nonexempt property and distributing the proceeds to creditors.
Sample Sentence:
After losing his job, the debtor filed for Chapter 7 to discharge most of his debts.
Why It Matters:
Chapter 7 offers individuals and businesses a fresh start by eliminating unsecured debts.
Quick Tip:
Eligibility is based on the means test comparing income to state averages.
Source: https://www.uscourts.gov/glossary
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