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 South Carolina, 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 the creditors. The Bankruptcy Code, which is federal law, provides a list of exemptions that protect certain types of property from being sold, allowing the debtor to retain those assets. These exemptions can include items like a portion of the equity in the debtor's home, automobile, personal belongings, and retirement accounts, among others. It's important to note that some debts are not dischargeable under Chapter 7, such as certain taxes, student loans, and child support obligations. Additionally, if the debtor has secured debts, such as a mortgage or car loan, the property may be subject to foreclosure or repossession if the debtor cannot continue to make payments. Debtors in South Carolina should consult with an attorney to understand how the state's specific exemptions may apply to their situation and to navigate the complexities of the bankruptcy process.