Debt relief glossary
Chapter 7 bankruptcy
A federal liquidation bankruptcy that discharges most unsecured debt in 3–6 months.
Chapter 7 bankruptcy is a federal court process that allows individuals to discharge (legally eliminate) most unsecured debts — credit cards, medical bills, personal loans, payday loans — within 3–6 months of filing. To qualify, you must pass the means test, which compares your income to your state's median income. If you are above the median, a more detailed disposable income calculation applies. In Chapter 7, a court-appointed trustee reviews your assets; assets above your state's exemption limits may be sold to pay creditors. Most Chapter 7 filers are "no-asset" cases and keep all their property. The filing fee is $338 (2026). A Chapter 7 discharge stays on your credit report for 10 years.