Chapter 7 Bankruptcy
In Chapter 7 bankruptcy cases, any assets not considered exempt under the law are turned over to a bankruptcy trustee. They sell the property and distribute the money equally among the unsecured creditors. In real scenarios, however, very few people are required to turn over any property to the trustee. In exchange for turning over any property not considered exempt under the law, the debtor is often entitled to a discharge of unsecured debts with few exceptions. On secured debts, the debtor either reaffirms the debt and continues to make payments, surrenders the property back to the creditor, or redeems the property by making a lump sum payment equivalent to the value of the merchandise.