Chapter 7 Bankruptcy Law When you file for Chapter 7 bankruptcy, also known as liquidation bankruptcy, a bankruptcy trustee will gather your assets (outside certain exemptions) and sell them off to pay your debts to the extent possible. Once the debts are discharged, you can no longer be held personally liable for them.

Chapter 7 is considered a liquidation bankruptcy: it doesn't require a repayment plan but the business has to sell some assets to pay creditors.