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 New York, Chapter 7 bankruptcy is a legal process that allows individuals to discharge their unsecured debts by liquidating 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. Certain property is exempt from liquidation under New York law, which means the debtor may keep these items. However, debtors should be aware that filing for Chapter 7 bankruptcy can lead to the loss of nonexempt property. Liens and mortgages on the debtor's property may also affect the distribution of assets to creditors. It's important for individuals considering Chapter 7 bankruptcy to understand the exemptions and legal implications specific to New York, and they may benefit from consulting with an attorney to navigate the process.