All the information you need to make an educated decision
Chapter 7 Bankruptcy Options
Chapter 7 often is what people have in mind when they consider 'bankruptcy'. It is liquidation bankruptcy, the intended result of which is a discharge and forgiveness of debt. It can be utilized both by individuals and businesses, and usually is the preferred filing option for those who meet the eligibility requirements.
Through filing Chapter 7, your property is liquidated and sold in order to pay off as much of your debt as possible. You will be left with enough property to be able to re-start your financial life, and some property such as clothing automatically is "exempt". Any unsecured debts that remain after liquidation generally are discharged, and you no longer are held responsible for their repayment.
In the case that you do not own much property to begin with, you may be considered a "no asset" case and your property subsequently will not be liquidated. It also is possible, in rare cases, to discharge secure debts.
Liquidation bankruptcy results in a discharge of debt so that the filer no longer is liable for repayment. Property of the filer is "liquidated" and then sold, to pay off as much of his or her unsecured debt as possible. Debts that remain after the liquidation generally are discharged.
There are certain unsecured debts that either are very rarely or never discharged in bankruptcy. Federal student loans, tax debts, and spousal or child support are among these obligations.
Chapter 7 is very popular because it does not require that you repay debt. For this reason, however, there are eligibility requirements that many people do not meet. If it is judged that your income is high enough such that you can make some payments, you may not be able to file for Chapter 7. The entire filing and liquidation process generally takes about three to six months.