Learn personal and professional finance terms to keep you in the know
Chapter 7 bankruptcy, often called 'liquidation bankruptcy,' is a legal process that allows individuals or businesses to eliminate most unsecured debts — such as credit cards, medical bills, and personal loans — by liquidating non-exempt assets to repay creditors. The process typically takes 3–6 months. Not all assets are at risk; most states have exemptions for a primary home, vehicle, and basic necessities. To qualify, you must pass a means test showing your income is below a certain threshold. Chapter 7 remains on your credit report for 10 years.
