Chapter 7 of the Bankruptcy Code provides for liquidation—the sale of the debtor’s nonexempt property and the distribution of the proceeds to creditors. A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13.

Instead, the bankruptcy 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.

In Washington State, Chapter 7 bankruptcy is a legal process that allows individuals to discharge their unsecured debts through the liquidation of their nonexempt assets. When a debtor files for Chapter 7, a bankruptcy trustee is appointed to oversee the case. The trustee's role is to sell the debtor's nonexempt property and distribute the proceeds to creditors. It's important to note that not all of the debtor's property can be sold; the Bankruptcy Code and Washington state law provide a list of exemptions that protect certain types of property from being liquidated, such as a portion of the equity in the debtor's home, car, and personal belongings. However, if the debtor has nonexempt assets, these will be sold to pay off creditors. Liens and mortgages may also affect which assets are available for liquidation, as secured creditors have rights to specific property. Debtors considering Chapter 7 should be aware that while it can provide a fresh start by discharging debts, it may also result in the loss of property.