Chapter 7 is known as the “liquidation bankruptcy’’ because it discharges most of your unsecured debt. That includes credit card debt, medical bills and personal loans.
It’s the quickest, simplest and most common type of bankruptcy. More than 63% of the 819,159 bankruptcy cases filed in 2016, were Chapter 7.
An even more encouraging bankruptcy statistic: 95.5% of Chapter 7 filings had their debts discharged. You must pass a “means test’’ to qualify for Chapter 7 filing. The means test examines financial records, including income, expenses, secured and unsecured debt. You must qualify under income limits that vary by state. You might be forced to sell any non-exempt assets, although important assets like home, car, equipment for work, are exempt and can be retained.
Generally, the Chapter 7 process can be completed in three to four months.