Chapter 7 Bankruptcy Law When you file for Chapter 7 bankruptcy, also known as liquidation bankruptcy, a bankruptcy trustee will gather your assets (outside certain exemptions) and sell them off to pay your debts to the extent possible. Once the debts are discharged, you can no longer be held personally liable for them.

What is Chapter 7 Bankruptcy? Chapter 7 bankruptcy is known as liquidation bankruptcy because it involves liquidating your property to satisfy your outstanding debts. If you have a lot of unsecured debts and no other options are right for you, this may be a viable solution for dealing with your debts.