The TL;DR is that the law allows you to “exempt” certain assets, mostly, basic necessities that people need to live a basic productive life. The point of bankruptcy is to make people pay what they can reasonably afford, not to make them pay every penny possible. The types of assets that chapter 7 does take away are things that poor people often don’t have anyway.
I think TV and movies have led people to believe that people “lose everything” when they file bankruptcy and end up on the streets. That’s just not reality, at least in the US.
