Debt

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

Jordan Park By Jordan Park, Senior Debt Relief Editor · Updated 2026-06-09
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Chapter 7 bankruptcy is a liquidation proceeding under 11 U.S.C. Chapter 7 that can discharge most unsecured debts in roughly 3-6 months. 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 student loans and most taxes are rarely dischargeable. 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.
Also Known As
Liquidation Bankruptcy Straight Bankruptcy Chapter 7 Consumer Bankruptcy
Used in Context
  1. After losing her job, she filed Chapter 7 bankruptcy to discharge thousands in credit card and medical debt.
  2. His attorney ran the means test first to confirm he qualified for Chapter 7 rather than Chapter 13.
  3. A debt-relief lead from Dreamy Leads connected the consumer with a bankruptcy attorney who reviewed Chapter 7 eligibility.
Related Terms
Debt Chapter 13 Bankruptcy A reorganization bankruptcy that lets you keep your assets and repay debts through a court-approved plan Debt Bankruptcy Means Test The income screen that decides whether you qualify for Chapter 7 bankruptcy Debt Automatic Stay The court order that instantly freezes most collection the moment you file bankruptcy Debt FDCPA (Fair Debt Collection Practices Act) Federal law that limits how third-party debt collectors can contact and treat you
Frequently Asked Questions

How long does Chapter 7 bankruptcy take?

A typical Chapter 7 case can discharge most unsecured debts in roughly 3-6 months from filing to discharge. The exact timeline depends on your court, the trustee's review of your assets, and whether any complications arise in your case.

Does Chapter 7 erase student loans and taxes?

Usually not. Student loans and most taxes are rarely dischargeable in Chapter 7. You generally keep owing them unless you meet narrow exceptions, which vary by situation. Most unsecured debts like credit cards and medical bills can be discharged.

How long does Chapter 7 stay on my credit report?

A Chapter 7 bankruptcy can remain on your credit report for up to 10 years from the filing date. This can affect your ability to borrow during that period, though the impact often lessens over time as you rebuild credit.

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