Chapter 7 bankruptcy is a form of individual bankruptcy in which most of debtor's assets are sold off in order to pay creditors, with the debt that can't be paid off being forgiven. Certain property is exempt from sale; the exemptions vary by state. Chapter 7 erases most debts but still affects credit history negatively. Chapter 7 is reserved for individuals and companies that cannot afford to pay any of their debts.Nolo.com: Chapter 7 Bankruptcy

In order to be eligible to use Chapter 7 bankruptcy you need to pass a means test. One way to satisfy the means test is to establish that your family income is less than the median income for families of a similar size in your state as determined by the Census Bureau. This number can and does change from year to year, so it's a great idea to check and see what the median is in your state for the current year. If your income is still higher than the median for your particular family size, a Chapter 11 bankruptcy restructuring may still be able to help.

Disclaimer: The content on this page is not a substitute for legal advice. Consult a lawyer before filing for Chapter 7 bankruptcy.