Chapter 7 – Page A

Chapter 7 bankruptcy is sometimes called “liquidation” bankruptcy — it cancels your debts, but you might have to let the bankruptcy court liquidate (sell) some of your property for the benefit of your creditors, although a good bankruptcy attorney can often offer alternatives to selling any of your property. Chapter 7 bankruptcy refers to the chapter of the federal statutes (the Bankruptcy Code) that contains the bankruptcy law.

Bankruptcy Costs in Time and Money
The whole Chapter 7 bankruptcy process takes about four to six months, costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse.

Who Can File
Chapter 7 can be a powerful remedy for debt problems, but it isn’t available to everyone. For example, you won’t be able to use Chapter 7 if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan.

Bankruptcy Disclosures
To file for bankruptcy, you fill out a two-page petition and a number of other forms. Then you file the petition and forms with the bankruptcy court in your area. Basically, the forms ask you to describe:

  • your property
  • your current income and its sources
  • your current monthly living expenses
  • your debts
  • property you claim the law allows you to keep through the bankruptcy process (called “exempt property”) — most states let you keep some equity in your home, clothing, household furnishings, Social Security payments you haven’t spent, and other necessities such as a car and the tools of your trade.
  • property you owned and money you spent during the previous two years, and
  • property you sold or gave away during the previous two years.

You must also file a certificate showing that you have completed credit counseling with an agency approved by the United States Trustee. (For a list of approved agencies for this part of Wisconsin, go to the Trustee’s website,, and click “Credit Counseling and Debtor Education;” our office highly recommends Hummingbird because it has proven to be the least biased and most dependable means of complying with the credit counseling requirement. If you’re facing an emergency, like a foreclosure or repossession in the next few days, you can file just the two-page petition, but you must file the rest of the forms within 15 days.