Chapter 7 bankruptcy, also known as "liquidation," is a legal process by which most unsecured debts can be discharged, or wiped out. Chapter 7 bankruptcy is known as liquidation because any non-exempt assets the debtor has may be liquidated (sold) by the trustee for the benefit of creditors. Many Chapter 7 bankruptcy debtors have no non-exempt assets, and so there is no liquidation, and unsecured debts are simply discharged. There are, however, certain unsecured debts that are not dischargeable in Chapter 7 bankruptcy. See if Chapter 7 is Right for You.