Why is chapter 7 bankruptcy called “liquidation”?

Arizona Chapter 7 Bankruptcy has many nicknames, such as “straight bankruptcy” or “liquidation”. Liquidation is a good description because one basic premise of chapter 7 bankruptcy is that your unsecured creditors are entitled to the value of all you non-exempt property. For example, in Arizona if you owned a Mickey Mantle rookie card in mint condition that is worth $1500 when you filed chapter 7 bankruptcy it will be considered a non-exempt asset. Non-exempt means that there are no laws which guarantee that you are entitled to keep your property. Assuming you have ten unsecured creditors, how does each of them receive their share of the baseball card? The answer is that the trustee will liquidate it by selling it for cash. Cash is a liquid asset that can easily be divided ten ways so each creditor gets his share of the value of the baseball card.  In exchange for the liquidation and division of all your non-exempt assets you are entitled to receive a “discharge order”. The discharge eliminates your obligation to pay your unsecured creditors anything beyond what they received as a result of the liquidation of your non-exempt assets.