Which Chapter is associated with liquidation among the listed bankruptcy types?

• A. Chapter 7 Liquidation
• B. Chapter 11 Business
• C. Chapter 12 Farmland
• D. Chapter 13 Individual

Answer: (A)

In bankruptcy, liquidation means selling off the debtor’s assets to pay creditors. Among the listed chapters, the one designed for liquidation is Chapter 7. In Chapter 7, a bankruptcy trustee gathers and liquidates nonexempt property to repay creditors, and after that process most remaining unsecured debts are discharged, giving the debtor a fresh start. Some property may be exempt and not sold, depending on state laws and exemptions. The other chapters focus on reorganization or repayment plans: Chapter 11 is for business reorganization, Chapter 12 supports family farmers or fishermen, and Chapter 13 involves a court-approved repayment plan for individuals rather than liquidation.