Chapter 7 Bankruptcy, also known as “liquidation bankruptcy,” allows individuals to discharge most unsecured debts, such as credit cards, medical bills, and personal loans, providing a fresh financial start. One of its primary benefits is the automatic stay, which immediately stops collection actions, wage garnishments, and creditor harassment. Unlike Chapter 13, there is no repayment plan—non-exempt assets may be liquidated to pay creditors, but many individuals retain essential property through exemptions. This process typically takes 3-6 months and can help those facing overwhelming financial hardship. While Chapter 7 provides significant relief, it impacts credit scores and remains on credit reports for up to ten years. It is crucial to determine eligibility based on income and assets before filing.
Disclaimer: Khan Paralegal and Notary is not an attorney and does not provide legal advice. For legal guidance, consult a qualified bankruptcy attorney.