Chapter 7 Bankruptcy A liquidation bankruptcy that can wipe out most unsecured debts in a few months

Chapter 7 bankruptcy is a liquidation proceeding under 11 U.S.C. Chapter 7 that can discharge most unsecured debts within months: the U.S. Courts say the discharge generally comes 60 to 90 days after the first date set for the meeting of creditors. To qualify, you must pass a means test that compares your income against your state's standards. A court-appointed trustee may sell your non-exempt assets to repay creditors, though exemptions protect many basic possessions. Filing typically erases credit cards, medical bills, and personal loans, but most student loans and certain taxes are not discharged. The filing stays on your credit report for up to 10 years, which can affect future borrowing. Whether Chapter 7 makes sense depends on your income, assets, and the types of debt you owe, so outcomes vary by your situation and state law.