The Bankruptcy Code (Title 11, United States Code, Section 101 et. seq.) is separated into Chapters. Some of these Chapters contain laws and general provisions that apply to all or most all bankruptcy cases. A few of these Chapters actually contain the specific laws that provide particular kinds of bankruptcy relief to individual debtors, including Chapter 7, and this is why we say “the debtor filed a Chapter 7 bankruptcy.”

Chapter 7 creates a process that allows debtors to get a discharge from their debts so that they can start their financial lives over. Chapter 7 creates a bold “line in the sand” which is the date of the filing of the petition. All debts that arose before that date are discharged, with a few exceptions. All debts that arise after that date are not discharged. The debtor gets to keep or protect certain property that is claimed as “exempt” in Chapter 7.

If there is any unprotected property, it is collected and sold by the Bankruptcy Trustee and the surplus proceeds are distributed pro rata to creditors. Sometimes Chapter 7 cases are called “liquidations”, but in reality, the overwhelming majority of cases pass through the system without the Trustee selling or liquidating any property; these cases are called “no asset cases” and they make up the huge majority of all cases filed.