Bankruptcy Info Center


Filing for bankruptcy can reduce or eliminate unsecured debts such as credit card debts and medical bills. The Bankruptcy Law Offices of Stephen Johnson will use the bankruptcy laws to obtain debt relief for you.

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Frequently Asked Questions About Chapter 7 Bankruptcy

Q: How does Chapter 7 liquidation work?

A: In a Chapter 7 case, the debtor must relinquish his or her nonexempt property to a bankruptcy trustee, who then converts the property into cash by selling it and pays the debtor's creditors from the sale proceeds. In return, the debtor receives a Chapter 7 discharge of certain debts if he or she is eligible for such a discharge, pays the filing fee, completes a personal financial management course and obeys the court's directives.

Q: Are all debtors automatically eligible for a Chapter 7 discharge?

A: No. A debtor may not be eligible for a discharge under Chapter 7 if he or she has been granted a discharge in a Chapter 7 case within the last eight years. Debtors who engage in certain fraudulent conduct related to the bankruptcy or their financial situation also may not be eligible for discharge. In addition, if the debtor refuses to answer questions or obey orders of the bankruptcy court, the court may refuse to grant a discharge.

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For most consumers, life before bankruptcy is fraught with financial difficulties. It is important to remember that although bankruptcy is not the first resort, it is best not to wait too long to take action. If you are facing what seems to be insurmountable debt, contact a chapter 7 attorney at once in order to make the best of a bad situation.

About the Bankruptcy Process

The bankruptcy laws are powerful tools that can be used to obtain debt relief.

At the Bankruptcy Law Offices of Stephen Johnson, we are experienced bankruptcy practitioners who work to obtain maximum debt relief for our clients while enabling them to retain as much property as possible.

Some general information about bankruptcy appears below. You probably have additional questions about what can be done to help you obtain debt relief.

In a free consultation, an attorney at our firm can review your situation and recommend the right solution for you.

Free Consultation with a Lawyer

We can meet with you during business hours, in the evening or on weekends by appointment.

For a free consultation with an attorney at the Law Office of Stephen Johnson in Auburn, including Grass Valley, California, Call 530-823-3655, or send us an e-mail.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Chapter 7 Bankruptcy - An Overview

Both individuals and businesses may find themselves with more debts than they can pay when due. In such cases, filing for bankruptcy may provide a solution to what seems like an insurmountable problem. Bankruptcy provides two basic forms of relief: (1) liquidation and (2) rehabilitation, also known as reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. An attorney at the Bankruptcy Law Offices of Stephen Johnson in Auburn, California, can advise individuals and businesses about whether Chapter 7 is the right choice for them. The bankruptcy lawyer's goals are to help Chapter 7 debtors make a fresh start and ensure that creditors are paid.

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Bankruptcy Abuse Prevention and Consumer Protection Act

On April 20, 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which instituted substantial changes to the Bankruptcy Code. Most provisions of BAPCPA became effective in October 2005. In an effort to exclude from Chapter 7 relief those debtors deemed to have the ability to pay at least some of the debts that would otherwise be discharged in Chapter 7, BAPCPA tightened the eligibility requirements for Chapter 7 and broadened the court's power to dismiss Chapter 7 petitions for "abuse."

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Discharge Under Chapter 7

"Discharge" in the bankruptcy sense refers to clearing the debtor's slate of all, or most, past debts. Although many people expect that filing for bankruptcy will wipe out all of their debts, that is not always the case. Bankruptcy only discharges certain debts. The availability of discharge depends on the type of bankruptcy proceeding involved, who the debtor is and what type of debts the debtor has.

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Exempt vs. Non-exempt Property Under Chapter 7

In a Chapter 7 liquidation case, the debtor must relinquish certain property to the bankruptcy trustee so that he or she can sell the property and use the proceeds to pay off debts. Property of the bankruptcy estate is broadly defined in the Bankruptcy Code. 11 U.S.C. § 541. The bankruptcy estate is technically the legal owner of all of the debtor's property and consists of all legal and equitable interests that the debtor has in property at the initiation of the bankruptcy case. Income that the debtor earns after the date of the petition is not included in the bankruptcy estate. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up.

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Alternatives to Chapter 7 Bankruptcy

The term "workout" is used to describe a non-bankruptcy negotiated modification of debt. More simply stated, a workout is an out-of-court agreement between a debtor and his or her creditors for repayment of the debts between them, which is negotiated without all the procedural complications - and perhaps the stigma - of the bankruptcy process.

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Chapter 7 Resource Links

U.S. Bankruptcy Courts
A brief overview of the structure and function of bankruptcy courts.

Bankruptcy Basics: Chapter 7
Basic overview of liquidation under Chapter 7 of the Bankruptcy Code.

Bankruptcy: An Overview
A general overview of the topic of bankruptcy, along with state and federal materials, from Cornell University.

U.S. Bankruptcy Courts by State
Links to U.S. Bankruptcy Court sites.

Official Bankruptcy Forms
From the Administrative Office of the U.S. Courts.

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DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.


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