Chapter 7 bankruptcy 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—and potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.

In Illinois, 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, they are not required to submit a repayment plan as they would in a Chapter 13 bankruptcy. Instead, a court-appointed trustee is responsible for selling the debtor's nonexempt property to pay off creditors. The Bankruptcy Code and Illinois state law provide a list of exemptions that protect certain assets from being sold, such as a portion of the equity in the debtor's home, automobile, and personal belongings. However, if the debtor has property that is not covered by these exemptions, it may be sold by the trustee. It's important to note that some debts are not dischargeable, and some property may be subject to liens and mortgages, which means they can be reclaimed by secured creditors. Debtors considering Chapter 7 bankruptcy in Illinois should be aware that this process can lead to the loss of property and should consult with an attorney to understand the implications fully.