What should I know about a Chapter 7 bankruptcy?
In a Chapter 7 bankruptcy, the debtor gives up (liquidates) all his or her non-exempt property. The non-exempt property is sold and the money received is divided among the creditors, (the people to whom the debtor owes money).
The remaining debts are discharged. In other words, the court releases the debtor from paying the remaining debts, and creditors cannot try to collect any debt that was discharged by the bankruptcy court.
Many people only have property that is exempt. When that happens, the debtor keeps all his or her property, and the debts are discharged.