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 North 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 bankruptcy, they are not required to submit a repayment plan as they would in a Chapter 13 bankruptcy. Instead, a bankruptcy trustee is appointed to oversee the sale of the debtor's nonexempt property. The proceeds from the sale are then distributed to creditors according to the rules set out in the Bankruptcy Code. It's important to note that some of the debtor's property may be protected by liens or mortgages, and such property may be retained by the debtor if it secures debt that the debtor continues to pay. The Bankruptcy Code also provides a list of exemptions that allow the debtor to keep certain types of property up to a specific value, such as a portion of equity in a home, a vehicle, personal belongings, and retirement accounts. Debtors considering Chapter 7 should be aware that while it can provide relief from many types of debts, it may also result in the loss of property if it is not covered by exemptions.