What should a debtor expect in a Chapter 7 bankruptcy?

In a Chapter 7 bankruptcy, the process is primarily geared toward the liquidation of a debtor's non-exempt assets to pay off creditors. When a debtor files for Chapter 7, a bankruptcy trustee is appointed to oversee the case. This trustee assesses the debtor's assets and determines which ones are non-exempt—those that can be sold to generate funds to pay creditors.

It's important to note that although there are exemptions allowing debtors to retain certain essential properties (like a home, vehicle, or personal belongings within specified limits), any non-exempt assets may be liquidated. Therefore, debtors can expect that the Chapter 7 process will involve the sale of these non-exempt assets. In return for surrendering non-exempt property, debtors receive the opportunity for a fresh start, as most of their unsecured debts will be discharged, leading to complete debt relief after the processing of their case.

This liquidation aspect is a central feature of Chapter 7 and helps distinguish it from other types of bankruptcy like Chapter 13, which focuses on a structured repayment plan rather than liquidation.