What happens in Chapter 7
A trustee reviews the estate and administers available nonexempt assets for creditors. Exemptions may protect certain property. Many individual cases have no assets available for unsecured creditors.
Individuals and eligible business entities may file. Means-testing requirements apply to certain individual consumer-debt cases, not every Chapter 7 debtor.
Discharge has limits
Eligible individuals may receive a discharge of certain personal liabilities. Corporations and partnerships do not receive a Chapter 7 discharge. Some debts are not dischargeable, and valid liens may survive unless addressed through the applicable legal process.
Discharge, case closure, and dissolution of a business are separate events.
Handling a bankruptcy notice
A filing generally stays many collection activities, subject to exceptions and court relief. Route affected accounts for legal review and prevent inappropriate follow-up.
Track the case, court notices, claim deadlines, and instructions about filing a proof of claim. The available assets, claim priority, and case developments determine distributions. Neither full repayment nor a fixed completion date is guaranteed.
Source: U.S. Courts Chapter 7 overview.