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 Ohio, 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, they are not required to submit a repayment plan as they would in a Chapter 13 bankruptcy. Instead, a court-appointed trustee sells the debtor's nonexempt property to pay off creditors. The Bankruptcy Code and Ohio state law determine which assets are considered exempt, meaning the debtor can keep them. Common exemptions include a portion of the equity in the debtor's home, automobile, personal belongings, and retirement accounts. However, nonexempt assets are sold, and the proceeds are distributed to creditors. It's important for debtors to understand that filing for Chapter 7 bankruptcy may lead to the loss of some of their property if it is not covered by exemptions. Debtors in Ohio should consult with an attorney to understand how their assets would be affected by a Chapter 7 bankruptcy filing.