Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is the traditional form of bankruptcy wherein the court simply liquidates the assets of the debtor and distributes the proceeds to creditors in proportion to their share of total claims?

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Chapter 7 bankruptcy is commonly referred to as "straight bankruptcy" or "liquidation bankruptcy" because it involves the liquidation of the debtor's assets to pay off creditors. It is the most common form of bankruptcy for individuals and small businesses. Chapter 1 bankruptcy does not exist, while Chapter 11 and Chapter 13 bankruptcies involve reorganization of debts rather than liquidation.

Known Popularly by Its Section in the Federal Bankruptcy Code