Chapter 7 is the most common type of bankruptcy. It is sometimes referred to as "liquidation bankruptcy," or "straight bankruptcy."
The basic purpose of chapter 7 is to provide you with a fresh start by wiping out all qualifying debts including credit cards, medical bills, past due utility bills, charge-offs, repossession deficiencies, law suits as well as a variety of other debts. In chapter 7, there is no repayment required for most unsecured debts, your debts are wiped out completely and permanently. Contrary to popular belief, this option did not go away with the passing of the new bankruptcy laws.