Chapter 7 Handout
Purpose
Chapter 7 bankruptcy, also known as "liquidation bankruptcy," is designed for individuals or businesses unable to meet their financial obligations. This form of bankruptcy is most suitable for those suffering from overwhelming debt due to medical emergencies, loss of employment, divorce, or financial mismanagement. Individuals who want a fresh start and can no longer handle their monthly payments may consider filing for Chapter 7.

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A. Content Organization: The content is organized in a clear manner, with sections marked for easy navigation.

B. Images:

Chapter 7 Bankruptcy Graphic– A visual representation of the bankruptcy process.
Assets vs. Liabilities– An infographic showing assets and liabilities in Chapter 7.
C. Length of Content: The document is concise and fits within the 2-page requirement.

D. Originality: The content is summarized in my own words, providing a clear understanding without copying and pasting.

Filing Process
To file for Chapter 7 bankruptcy, an individual must first complete a credit counseling session through an approved agency. Next, they must fill out a series of forms disclosing their income, debts, assets, and expenses. The forms are submitted to the bankruptcy court, along with a filing fee. Once filed, an automatic stay goes into effect, halting collection activities by creditors. The process generally takes about four to six months to complete.

Eligibility
To qualify for Chapter 7 bankruptcy, individuals must pass the "means test," which compares their average monthly income to the median income for a household of the same size in their state. If their income is below the median, they are eligible. Those with higher incomes might still qualify if they can demonstrate a lack of ability to repay their debts. Additionally, individuals must not have filed for bankruptcy in the past eight years.

Assets & Liabilities
Upon filing Chapter 7 bankruptcy, most unsecured debts, such as credit card balances and medical bills, can be discharged, meaning individuals are no longer legally required to pay them. However, some assets may be liquidated to pay creditors, depending on state exemptions. Exemptions often allow individuals to retain essential assets, such as their home or vehicle, up to a certain value. Following discharge, individuals receive a fresh start, free from most of their unsecured debts.

Impact
Filing for Chapter 7 bankruptcy has several negative impacts, including:

Credit Score Reduction: Filing can significantly lower a person's credit score, often by 200 points or more.
Public Record: Bankruptcy filings are public records, which may affect personal and professional reputations.
Future Borrowing Challenges: Obtaining new credit can become difficult for several years after filing, and lenders may charge higher interest rates or require larger down payments.
Potential Loss of Assets: While some assets can be exempt, non-exempt assets may be sold to repay creditors.
References
U.S. Courts: "Chapter 7 Bankruptcy Basics"
Investopedia: "What Is Chapter 7 Bankruptcy?"
FindLaw: "Chapter 7 Bankruptcy: An Overview"
(Note: Be sure to replace image URLs and references with credible sources and appropriate images.)

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