Chapter 7
Bankruptcy
A Chapter 7 Bankruptcy is also known as a “liquidation” of your debts because this basically will help you eliminate most, if not all, of your debts.
However, some debts are non-dischargeable, which means you will be required to pay them back. In most cases, filing a Chapter 7 is a basically allowing you to start with a clean slate, stop harassing collection efforts by collection agencies, and eliminate all of your overdue bills.
To file for Chapter 7, you do not need to pay most of your overdue debts because you do not have the financial ability to pay your creditors back.