Chapter 7 is the bankruptcy provision most frequently used by individuals. It involves the complete liquidation of a debtor's property to pay creditors and wipes out the remaining debts, giving the debtor what's known as a "fresh start". However, the debtor can retain certain property that is specifically "exempt" depending her State's law, such as tools of one's trade, limited equity in a car and house, and some personal effects.

If you use Chapter 7 you may lose your home (depending on your state) but it does enable you to get out from under the burden of debt more quickly.

The post-October 17, 2005, Bankruptcy Code made major changes in this chapter, making the process longer and more expensive and undeniably harder for consumers to shed debts than under the old law. Under one of the key changes, a means test determines whether a debtor can use a Chapter 7 filing or be forced to file a Chapter 13 and repay some of their debts over five years.