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Bankruptcy comes in a variety of forms, and these different types of bankruptcy are referred to by their place (chapter) in the bankruptcy code. Chapter 7 Bankruptcy is by far the most common form of bankruptcy for individuals, couples and small business owners.
In a Chapter 7 bankruptcy, you file your debts, assets and income with the bankruptcy court. A person assigned to administer your case, called the bankruptcy trustee, looks at all of your debts and assets and determines if you have any property that can be sold to pay off some of your debt. Whatever debt is left over is then discharged. While getting your property sold sounds frightening, most people will lose little if any of their property. This is because few people entering into bankrutpcy have assets worth selling that are not protected by your states bankruptcy exemptions.
The catch with Chapter 7 is a series of eligibility rules that may disqualify you from being able to get your debts discharged this way.
Check out the links below to learn more about how this common bankruptcy process works.