Chapter 7 bankruptcy is a liquidation proceeding. The debtor turns over all non exempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts.

To file a Chapter 7 bankruptcy:

• You must reside or have a domicile, a place of business, or property in the United States or a municipality.
• You must not have been granted a Chapter 7 discharge within the last 6 years or completed a Chapter 13 plan.
• You must not have had a bankruptcy filing dismissed for cause within the last 180 days.
• It must not be a "substantial abuse" of Chapter 7 to grant the debtor relief. Generally speaking, if after you pay the monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7.
• It would not be fundamentally unfair to grant the debtor relief under Chapter 7.

The most common reasons for consumer bankruptcy are:

• Unemployment
• Large medical expenses
• Seriously over extended credit
• Marital problems
• Large unexpected expenses