Chapter 7 (U.S. bankruptcy code)

Chapter 7 of the U.S. Bankruptcy Code, often called "liquidation bankruptcy," allows individuals or businesses overwhelmed by debt to eliminate most debts by liquidating non-exempt assets. A bankruptcy trustee is appointed to sell these assets, and the proceeds are distributed to creditors. After the process, many remaining debts are discharged, providing a fresh financial start. However, certain debts like student loans or taxes typically cannot be discharged. Chapter 7 is designed to provide relief from debt quickly, though it may involve losing some property, and does not eliminate ongoing financial obligations like future payments.