What is Chapter 7 Bankruptcy?

Chester County Chapter 7 Bankruptcy Lawyer | Stan Luongo | Luongo Bellwoar Chapter 7 bankruptcy is the most common form of bankruptcy in the United States. Chapter 7 sets the rules for the liquidation of a person’s or business’s assets to pay their debtors.


Individuals often opt to file for Chapter 7 bankruptcy because they can keep certain property if it is deemed exempt from creditors. The value of the property that can be claimed as exempt varies from state to state. If property is exempt, a lien on that property for a mortgage or auto loan often remain after the bankruptcy filing. All other property and assets are liquidated and distributed to creditors.

Our team can also help individuals with foreclosure defense if needed when filing for bankruptcy.

Many types of unsecured debt (debt without collateral) are cleared after the bankruptcy filing; however, some common exceptions include child support, income taxes in the past 3 years, property taxes, and student loans.

A chapter 7 bankruptcy filing stays on an individual’s credit report for 10 years after the filing.


If a business is unable to pay its creditors or make payments on its debt, the business may choose to file for chapter 7 bankruptcy. A business may also be forced to file for bankruptcy by its creditors.

One of the first steps when filing for Chapter 7 bankruptcy is to appoint a Trustee. The Trustee will examine the business’s assets and make a decision about whether to continue business operations. The Trustee oversees the process of liquidating assets and distributing the proceeds fairly to creditors. Fully secured creditors with collateral equal or greater than the amount they are owed are entitled to the collateral or its value. These rights do not change after filing for bankruptcy. For partnerships and corporations, after the assets have been distributed the business is dissolved but the unpaid debt still exists theoretically. Businesses owned by an individual can receive a chapter 7 discharge relieving the individual of the remaining debt.

How Bankruptcy Attorneys Help

A bankruptcy attorney can help decide the right time to file for bankruptcy, as well as determine if the case qualifies for chapter 7 bankruptcy or needs to file for chapter 13. The attorney ensures that all the requirements for bankruptcy are fulfilled so the process can be completed as quickly and efficiently as possible.

There are ways to file for bankruptcy without the help of an attorney by filling out federal forms or buying certain software, however the process is very complicated. Bankruptcy lawyers exist because the benefit of having an experienced lawyer to represent you in bankruptcy court outweighs the cost of their services.

Contact Us

The team at Luongo Bellwoar is an award-winning bankruptcy firm. We excel in ensuring you know your options, can navigate the process seamlessly, and get the support and representation you deserve.

“I was kept abreast of everything that was going on, from beginning to end.”

“I couldn’t have been more satisfied, you gave me my life back.” 

“Absolutely would use the firm again. Hopefully wouldn’t have to but wouldn’t hesitate a second to call if needed.” 

If you are considering filing for bankruptcy or want a legal consultation to explore your options, give us a call (610-430-6600). We practice in Chester County as well as Delaware, Montgomery, Philadelphia, Lancaster and Berks Counties. We have offices in West Chester PA, return calls promptly, and offer evening and weekend appointments.

Still have questions? View frequently asked questions about bankruptcy.