What is straight bankruptcy?

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Updated: 4/13/2007 3:35 pm
'Straight' bankruptcy is another name for Chapter Seven bankruptcy. It's probably the most people think of when discussing individual bankruptcy. 'Chapter Seven' refers to one of the four sections of the federal bankruptcy code, by which an individual or company may get relief from debt. Others are Chapters Eleven, Twelve, and Thirteen, which each have different legal requirements and outcomes. When an individual files for a Chapter Seven liquidation, most-- or all-- debts are canceled. In exchange, assets must be surrendered to a court-appointed trustee, who sells them to repay the debts. Some assets are exempt from sale, while others are almost never exempt. When a business files Chapter Seven, it closes, and its assets are sold to pay its bills. Bankruptcy procedures vary from state to state, and it's important to consult a bankruptcy attorney before making a decision whether filing 'straight' bankruptcy is right for you or your company.
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