Chapter 7
Chapter 7 is the most common form of bankruptcy. It is a liquidation proceeding in which the debtor's non-exempt assets, if any, are sold by the Chapter 7 trustee and the proceeds distributed to creditors according to the priorities among creditors established in the Code. Exempt property is not sold, but can be kept by the debtor.
Chapter 7 is available to individuals, married couples, corporations, LLCs and partnerships. Individual debtors get a discharge within 4-6 months of filing the case.
If there are assets which are not exempt, the trustee takes control of those assets, sells them and pays creditors as much as the proceeds permit. Again, exempt property is not taken and sold, but may be kept by the debtor if he or she chooses.
Any wages the debtor earns after the case is begun are the debtor's; the creditors have no claim on those earnings.