Chapter 7 (U.S. Bankruptcy)

Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals or businesses to eliminate most debts by selling non-exempt assets. The court appoints a trustee to oversee the process, which involves identifying and liquidating non-exempt property to pay creditors. Once the process is complete, eligible debts are discharged, giving the filer a financial fresh start. It is typically used when debts outweigh assets and there is little property to protect, providing relief from creditor collection actions and preventing further legal proceedings.