Chapter 7 Background
A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in
. Instead, the
trustee gathers and sells the debtor's nonexempt assets and uses the proceeds
of such assets to pay holders of claims (creditors) in accordance with
the provisions of the Bankruptcy Code. Part of the debtor's property may
be subject to liens and mortgages that pledge the property to other creditors.
In addition, the Bankruptcy Code will allow the debtor to keep certain
"exempt" property; but a trustee will liquidate the debtor's
remaining assets. Accordingly, potential debtors should realize that the
filing of a petition under chapter 7 may result in the loss of property.