Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most simple way to eliminate debt. This process discharges, or wipes out, unsecured debts, such as:
- Credit card bills
- Medical expenses
- Personal loans
- Debts from repossessions of vehicles
- Debts from foreclosures
Technically, Chapter 7 bankruptcy involves selling your non-exempt assets to pay a portion of your unsecured debt to your creditors. However, most people who file retain a majority of their assets due to exemptions. Typically, if you are able to maintain payments on your house or car, you will be able to keep those assets.