Bankruptcy cases are filed pursuant to several sections (known as “chapters”) of the Bankruptcy Code.
Chapter 7 is the type of bankruptcy most people think of when they hear the generic term “bankruptcy.”
In a Chapter 7 case, most debts are forgiven (“discharged”) in exchange for two things: Honesty and property.
The person filing a bankruptcy case is known as the “debtor.” Only a very small minority of debtors lose and of their property when they file a Chapter 7 case, as either their stuff is “exempt” from being taken, or is security for a debt (e.g., a car loan), or is simply not worth the bankruptcy trustee’s trouble to take and sell.
As long as you, the debtor, tell the truth, the whole truth, and nothing but the truth in your bankruptcy documents, your debts will be discharged (with certain exceptions, including most taxes, student loans and debts incurred through dishonesty) and you will very probably lose none of your property.
Chapter 7 is designed to give the “honest but unfortunate” debtor a fresh financial start.
