Chapter 7 bankruptcy is designed to discharge debt.
The trustee will collect all of the property that is not exempt and sell it to pay creditors. After this is done, the debtor will no longer owe the creditors any money. There is a fee to declare Chapter 7 bankruptcy.
Debtors usually keep their houses and cars
in Chapter 7, but they must continue to pay the loans for this property as if they have not declared bankruptcy. Debtors may also return property and not have to pay any more on the debt. Debtors may also pay what the property is now worth and keep the property.
Sometimes creditors take liens on furniture or household goods to make sure the debtor pays the debt on some other property. The debtor may have these liens removed in bankruptcy.
Some debts will not be discharged even in bankruptcy. These include debts involving fraud, accidents involving drunken driving, student loans, certain taxes, alimony and child support. Also, a person who has enough money to pay back all or most of his debts may not declare Chapter 7 bankruptcy.