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 New Hampshire, as in other states, Chapter 7 of the Federal Bankruptcy Code governs the process of liquidation bankruptcy. When an individual files for Chapter 7 bankruptcy, they are not required to submit a repayment plan as they would in a Chapter 13 bankruptcy. Instead, a bankruptcy trustee is appointed to oversee the sale of the debtor's nonexempt assets. The proceeds from the sale are then distributed to creditors according to the rules set out in the Bankruptcy Code. Certain property of the debtor may be protected by liens or mortgages, meaning that these assets are secured for specific creditors. The Bankruptcy Code also provides a list of exemptions that allow the debtor to retain certain types of property, deemed 'exempt,' up to a certain value. However, assets that are not exempt can be sold off by the trustee. It's important for individuals considering Chapter 7 bankruptcy in New Hampshire to understand that this process can lead to the loss of property, as nonexempt assets will be liquidated to pay off creditors.