Which of the following best describes Chapter 7 bankruptcy?

Chapter 7 bankruptcy is characterized primarily by the liquidation of non-exempt assets to pay off creditors. In this process, a bankruptcy trustee is appointed to oversee the case and will sell any non-exempt assets that the debtor owns. The proceeds from this liquidation are then distributed among the creditors in accordance with the law.

This approach allows individuals or businesses overwhelmed by debt to have a fresh start, as most of their unsecured debts can be discharged, meaning they are no longer legally required to pay them. It's essential to note that certain assets may be exempt from liquidation, typically allowing debtors to retain necessary property, such as basic home furnishings, a vehicle up to a specific value, and tools necessary for employment.

In contrast, the other options, like reorganization of debts, negotiation with creditors, and debt restructuring, refer to processes associated with different chapters of bankruptcy, such as Chapter 11 or Chapter 13, where the focus is on maintaining control of assets and developing a plan to repay debts over time rather than outright liquidation.