What is Chapter 7 Bankruptcy?Chapter 7 bankruptcy is often referred to as a "fresh start" bankruptcy. It is a liquidation process that allows an individual to "discharge" unsecured debt, but it usually does not cover secured (liens) or priority (unpaid taxes, child support, or student loans) debt. The reason most people file for a chapter 7 bankruptcy is that they could not repay all of their debts because of an illness, unemployment, martial problems, unexpected medical expenses, over-extended credit or other large expense. The vast majority of people who file a Chapter 7 bankruptcy do not own more property than they would be allowed to keep. Those who do own more than bankruptcy laws permit will have to turn over the nonexempt property.