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  Chapter 7 Bankruptcy

Chapter 7 is a form of bankruptcy that provides for liquidation. When a person files for Chapter 7, he/she agrees to sell all non-exempt assets to repay creditors. Once creditors have been paid with all existing assets, outstanding unsecured debt is cancelled, except for child support and any fines resulting from crimes committed by the debtor.

You cannot file for Chapter 7 bankruptcy if you have filed for Chapter 7 bankruptcy in the past 6 years. Because a record of the bankruptcy remains on the debtor's credit report for 10 years, the debtor may have difficulty securing loans from creditors or may have to pay very high interest rates.