What does Chapter 7 Bankruptcy allow for individuals?

Chapter 7 Bankruptcy is designed primarily for the liquidation of an individual’s debts, allowing them to discharge most unsecured debts, such as credit card debt and medical bills. In this process, a bankruptcy trustee is appointed to oversee the case, and they may sell off certain non-exempt assets to pay creditors. While borrowers may be relieved of their obligations, it is important to understand that Chapter 7 does not allow for retention of assets in most cases unless those assets are exempt.

The focus of Chapter 7 is on immediate debt relief rather than restructuring or repaying debts over time. This distinguishes it from other forms of bankruptcy, such as Chapter 13, which is oriented towards reorganizing debts and creating a manageable payment plan. Thus, Chapter 7 serves individuals seeking a fresh start by eliminating debts that they cannot or do not intend to repay.