Chapter 7 bankruptcy is designed for debtors who do not have the ability to repay their debts through a chapter 13 or chapter 11 repayment plan.  In other words, when deducting monthly  household living expenses from monthly household income, there is no disposable income that can be used to pay a portion of the debt back over time.

In chapter 7 cases, all of your assets become property of a "Bankruptcy Estate" upon the filing of your case and a Trustee is assigned to liquidate your unexempt assets and distribute the proceeds to your creditors.  However, State and Federal exemption laws allow you to protect or "exempt" a certain amount of your assets from the bankruptcy estate such that the Trustee cannot liquidate those assets.  In the majority of Chapter 7 cases, however, all assets are satisfactorily claimed exempt and the Trustee thus does not liquidate any assets for the benefit of creditors.

Your Chapter 7 is prepared by disclosing all assets, debts, income, expenses, and other miscellaneous financial information in the official Bankruptcy Petition, Schedules, and Statements.  Once prepared, reviewed, and signed, it is electronically filed with the appropriate bankruptcy Court.

Once your chapter 7 case is filed, you will be required to attend a hearing known as the "341(a) Meeting of Creditors", which occurs approximately one month after your case is filed.  This hearing is primary designed for your Chapter 7 Trustee to verify your identity and to get your testimony that the information contained in your bankruptcy paperwork is truthful and accurate.  The hearing also affords your trustee an opportunity to ask you additional questions they may have regarding the information in your bankruptcy paperwork.

Although creditors may attend your hearing to ask questions regarding the nature and location of assets, it is extremely rare that they will actually appear.  In fact, if your creditors were to object to your bankruptcy, the hearing would not normally be the appropriate forum to make such objections, and therefore, creditors rarely appear.  Creditors have ninety days from the date you file your case to object to the discharge of your debt(s).  Objections to discharge must be brought by adversary proceedings filed with the Bankruptcy Court.  If no objection is timely filed with the Court, you will receive the chapter 7 discharge shortly after that 90-day period has expired.  Though objections to discharge are rare, if one is filed, you will always have an opportunity to oppose and ultimately the decision will go before a bankruptcy Judge.