Chapter 7 bankruptcy is also referred to as liquidation bankruptcy and is the most common type of bankruptcy and in most cases the most basic form of bankruptcy. Chapter 7 provides liquidation of an individual’s property and then distributes it to creditors. Individuals are allowed to keep “exempt property.” Exemptions vary by state. There are state specific exemptions and federal exemptions. The courts will often provide the appointment of a trustee for businesses that file chapter 7. The trustee will operate the business for a period of time with the primary role of managing asset liquidations and proceeds.