Kaeding Law Office, PLC

Council Bluffs, Iowa

Kristina M Kaeding

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy


Chapter 7 is designed to eliminate debt. It is often referred to as a “straight” bankruptcy or a “liquidation” bankruptcy. It is known as such because the trustee assigned to the case can sell any non-exempt or unprotected assets and pay the money to your creditors. However, it is important to understand that most property is protected by exemption under state law. When an asset is exempt, a bankruptcy trustee cannot take the property. In a Chapter 7, most debts are wiped out.

The purpose of filing a Chapter 7 is to discharge a debt, or to cancel some debtor obligations (although it is important to understand that some debts cannot be discharged in a Chapter 7 bankruptcy). Once a Chapter 7 bankruptcy has been filed, the debtor will immediately be protected against attempts by the creditors to collect on the debts. Approximately 4-6 weeks later, the debtor will have to attend a court hearing known as a “Meeting of the Creditors”. Although it is referred to as “Meeting of the Creditors” it is usually rare for an actual creditor to attend this meeting and ask the debtor questions (because the creditors are unable to contact the debtor after a Chapter 7 has been filed, this is their opportunity to address the debtors and ask questions).

The “Meeting of the Creditors” is conducted by a trustee. The trustee is not a judge but is an official appointed by the Court to oversee the meeting and to ask the debtor a series of questions. The debtor’s attorney will also be present at this meeting and the attorney will prepare the debtor with the questions that he or she can expect to be asked at this proceeding. This process usually only takes a few minutes.

After the meeting, the bankruptcy case will conclude approximately 60 days later.