The purpose of filing a chapter 7 is to seek relief from debt by discharging certain financial obligations. Chapter 7 is the part of the Bankruptcy Code that deals with “liquidation”. When one starts a bankruptcy (by filing a bankruptcy petition), the petitioner has an obligation to list all of his/her assets and liabilities. To protect one’s assets from seizure by the bankruptcy trustee, the petitioner seeks protection from statutory laws called “exemptions”. Each state has its own unique exemptions. Thereafter, all “non-exempt” assets (an asset that is not protected with an exemption), if any exists, are turned over to the trustee, and the trustee liquidates (or sells) the asset. The net proceeds of the sales are then divided between the various creditors. While this liquidation of assets in a chapter 7 proceeding rarely happens, it is of paramount importance to make certain that one’s assets are fully protected with the correct exemptions.