What does "chapter 7 bankruptcy" entail?

Chapter 7 bankruptcy is primarily known for its process of liquidation, where the debtor’s non-exempt assets are sold off to pay creditors. This type of bankruptcy is designed for individuals or businesses who are unable to repay their debts. When a person files for Chapter 7, a bankruptcy trustee is appointed to review the debtor’s finances and determine which assets can be liquidated. The funds generated from this liquidation are then distributed to creditors, allowing the debtor a fresh start by discharging eligible debts.

In contrast, the other options do not accurately represent the characteristics of Chapter 7. It does not allow individuals to reorganize their debts, which is the purpose of Chapter 13 bankruptcy. It is available to both individuals and businesses, so it's incorrect to say it is only for businesses. Furthermore, since Chapter 7 involves the liquidation of non-exempt assets to settle debts, it does not fit the description of a bankruptcy type that involves no asset liquidation.