A Chapter 7 bankruptcy is commonly referred to as a straight liquidation bankruptcy.

The goal of a Chapter 7 is basically to relieve honest debtors from honest debts and provide a fresh start. Chapter 7 is the most frequently filed bankruptcy and most currently chosen by individual debtors

A Chapter 7 bankruptcy allows a debtor to list his or her assets and debts and then after claiming as exempt certain assets pursuant to either the federal or state exemptions, come out of the bankruptcy with a discharge, debt free while retaining for future use his or her exempt property. The Trustee will sell non-exempt assets to be distributed to creditors. It takes approximately 4 months from the date of filing a Chapter 7 to obtain a discharge in a Chapter 7 bankruptcy. For example, if a Chapter 7 was filed on January 1, a meeting of creditors would be held on or before February 10 and a discharge would be entered approximately 60 days later. The entire Chapter 7 bankruptcy procedure generally takes about 4 months.

In summary, a Chapter 7 results in the majority of the debts owed being discharged, while retaining certain exempt property, and obtaining a fresh start.

A Chapter 7 may also be filed for virtually all forms of business ventures including but not limited to partnerships and corporations.