What best describes Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is best described as a straight liquidation of non-exempt assets. In this type of bankruptcy, the individual's non-exempt assets are sold off to repay creditors, allowing the debtor to eliminate most of their unsecured debts. This process is designed for individuals or businesses that are unable to pay their debts and want to start afresh financially.

During Chapter 7 proceedings, a court-appointed trustee evaluates the debtor’s property, determines which assets are non-exempt (which may be seized), and sells them to provide some compensation to creditors. The remaining debts that qualify for discharge are wiped clean, thereby allowing the individual to move forward without the burden of those debts.

The other options provide descriptions of different financial recovery methods. A plan to repay debts over time implies a Chapter 13 Bankruptcy, where debtors create a repayment plan. A method to forgive student loans does not accurately represent any bankruptcy chapter but pertains to specific loan forgiveness programs. Lastly, a process to negotiate with creditors can occur in various circumstances but is not a hallmark of Chapter 7, which focuses primarily on liquidation and discharge of debts rather than negotiations.