Which type of bankruptcy allows for a division of assets among creditors due to no means to repay debts?

Chapter 7 Bankruptcy is often referred to as "liquidation bankruptcy." It is designed for individuals or businesses that cannot repay their existing debts. In this process, a trustee is appointed to oversee the liquidation of the debtor's non-exempt assets. The proceeds from selling these assets are then distributed among the creditors in accordance with the priority established by bankruptcy law. This type of bankruptcy effectively resolves the debtor's financial difficulties by allowing them to eliminate most of their unsecured debts, thereby providing a fresh start.

In contrast, other types of bankruptcy, such as Chapter 11, Chapter 13, and Chapter 12, are focused on restructuring debts and repayment plans rather than liquidation. In Chapter 11, businesses can reorganize their debts while continuing operations; Chapter 13 allows individuals to set up a repayment plan to pay back their debts over time; and Chapter 12 is specifically for family farmers to manage their financial obligations. Therefore, they do not involve a division of assets among creditors in the same manner as Chapter 7 does, making Chapter 7 the correct answer in this context.