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Chapter 7 bankruptcy is the most common chapter that people file bankruptcy under. It is the process that most people typically think of when they think of bankruptcy. Chapter 7 bankruptcy discharges (wipes away) most unsecured debt. Unsecured debt is debt obligations that are not tied to any property that is the collateral. Classic types of unsecured debt obligations would be credit cards, personal loans, cash advance loans, etc. Chapter 7 bankruptcy can also discharge certain tax debts, but there are specific requirements for that. 

Secured debt obligations would be things like a car loan or a mortgage. These types of debt are discharged by contract only. The property (your car or home) is still tied to the debt however. Which generally means that as long as you continue to make your payments you get to keep the property. 


While a bankruptcy trustee can liquidate unexempt property in a Chapter 7 bankruptcy, it is very rare as California has very generous exemptions (protection) for property including home equity protection. It is always best to consult with one of our Attorneys for more specific advice when it comes to your property and bankruptcy.

Here is a general overview and time line of the process:

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