Chapter 7 Bankruptcy
Chapter 7 bankruptcy — often called liquidation bankruptcy — discharges most unsecured debt, generally within a few months of filing. In exchange, a court-appointed trustee may sell non-exempt property to repay creditors, though many filers keep most or all of their belongings due to state and federal exemptions.
What Chapter 7 Is
Chapter 7 is a liquidation proceeding under federal bankruptcy law. A trustee is appointed to oversee your case, review your assets, and — if any non-exempt property exists — sell it to distribute proceeds to creditors. Most filers with limited assets ("no-asset" cases) don't lose any property at all. In return, most unsecured debts (credit cards, medical bills, personal loans) are discharged, meaning you're no longer legally required to pay them.
Who Typically Qualifies
Chapter 7 eligibility is primarily determined by the "means test," which compares your income to your state's median income for a household of your size. Filers who earn less than the median generally qualify; those who earn more may still qualify depending on allowed deductions and expenses. See our full Bankruptcy Eligibility page for the complete picture.
What Happens to Your Property
Property that qualifies under state or federal exemptions is protected from liquidation — this commonly includes some home equity, a vehicle, retirement accounts, and personal belongings, though exact amounts vary significantly by state. See Bankruptcy Exemptions for how this works and why it isn't safe to assume a specific dollar figure without checking current state law.
Typical Timeline at a Glance
Chapter 7 is generally the fastest bankruptcy option — many cases move from filing to discharge in a matter of months, though case complexity and court schedules affect exact timing. See Bankruptcy Timeline for a fuller breakdown.
Related Articles
This information is for general education only and is not legal advice. Bankruptcy law is complex and varies by jurisdiction and individual circumstances. Consult a licensed bankruptcy attorney before making any decisions about filing.