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 Wyoming, as in other states, Chapter 7 of the Bankruptcy Code is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Under Chapter 7 bankruptcy, a trustee is appointed to liquidate the debtor's nonexempt assets, which means selling these assets to generate funds to repay creditors. The process does not involve a repayment plan as in Chapter 13 bankruptcy. Instead, it provides a way to discharge certain debts and give the debtor a 'fresh start.' The debtor is allowed to keep exempt property, which typically includes basic necessities for living and working; however, the specific exemptions that apply may vary based on state law. In Wyoming, state statutes define what property is considered exempt, and debtors may also use federal exemptions in some cases. It's important for debtors to understand that filing for Chapter 7 bankruptcy could result in the loss of some of their property if it is not covered by exemptions.