Which type of bankruptcy forces the person filing to sell off their assets?

Chapter 7 bankruptcy is designed for individuals who find themselves in a position where they cannot manage their debt. One of the key features of Chapter 7 is that it allows for the liquidation of the debtor's non-exempt assets. This means that certain assets must be sold off to pay creditors. The process is overseen by a bankruptcy trustee, who is responsible for identifying and selling these assets, thereby distributing the proceeds to creditors.

The essence of Chapter 7 is to provide a fresh start to the debtor by discharging most of their unsecured debts after the asset liquidation process is complete. The focus here is on quickly resolving overwhelming debt burdens through the sale of assets, making it distinct from other chapters of bankruptcy that involve reorganizing debts and allowing individuals to keep their assets while making payments over time. Therefore, this chapter is commonly referred to as "liquidation" bankruptcy because it relies on asset liquidation as a primary means to satisfy creditor claims.