Chapter 7 bankruptcy is one of the most common form of personal bankruptcy. Chapter 7 bankruptcy also known as liquidation bankruptcy, individual liquidation, or straight bankruptcy. In a Chapter 7 bankruptcy, if the debtor has assets not protected by an exemption, a court appointed trustee may sell the assets and distribute the net proceeds to creditors according to the priorities established in the Code. Chapter 7 bankruptcies are designed to wipe out your financial obligations and to offer you a new clean, debt-free financial beginning.