Most individuals who are unable to pay their unsecured debts use Chapter 7 bankruptcy. With this procedure, most of your debts will be canceled. The court will appoint a bankruptcy trustee who will sell your non-exempt property and distribute the proceeds among your creditors.
Here are two things you should know about Chapter 7 bankruptcy:
1. Bankruptcy can be voluntary or involuntary
Voluntary Chapter 7 is the most common procedure. It’s initiated by a debtor seeking to eliminate their unsecured debts by filing a petition with the court. Cases of involuntary Chapter 7 bankruptcy are also reported in Connecticut, although they are rare.
The requirements of involuntary Chapter 7 are set by federal bankruptcy laws. They include:
- If three creditors file a petition with the court, a debtor can be forced into Chapter 7 bankruptcy. If a debtor has fewer than 12 creditors, a single creditor can file the petition.
- Each of the petitioning creditors must hold claims against the debtor that are neither contingent as to liability nor the subject of a bona fide dispute.
- The claims of the petitioners must total at least $21,050. This took effect on April 1, 2025.
If your creditors meet these requirements, you may end up facing bankruptcy without filing a petition.
2. You only need to visit the court once
Chapter 7 bankruptcy requires only one visit to the court. You need to attend a mandatory meeting with the bankruptcy trustee (341 meeting/meeting of creditors). This meeting can be in-person or virtual.
Besides you and the bankruptcy trustee, your attorney and creditors are also invited to attend. If there are no complications with your case after this meeting, you can get a discharge in three to six months without a hearing before a judge.
If you want to file for Chapter 7 bankruptcy, it’s important to learn more about it. This way, you can make informed decisions from the beginning.