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 Wisconsin, 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 bankruptcy, a 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 primary residence, automobile, personal belongings, and retirement accounts, up to certain values. Wisconsin has its own set of state exemptions that may be used in place of the federal exemptions, and debtors can choose which set of exemptions to apply in their case. It's important to note that secured debts, such as mortgages or car loans, may not be discharged in Chapter 7; the property can still be subject to foreclosure or repossession if the debtor cannot keep up with payments. Debtors should be aware that filing for Chapter 7 bankruptcy can lead to the loss of property, and it is advisable to consult with an attorney to understand the implications and the best course of action based on individual circumstances.