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Chapter 7 bankruptcy is a type of bankruptcy that allows a debtor to relieve him or herself of an overwhelming debt load in order to pay off creditors. Chapter 7 is a complete and total liquidation of a debtor's assets in order to pay off their creditors. This is the most common form of bankruptcy for an individual. The downside of filing a Chapter 7 bankruptcy proceeding may be the risk of losing their home and vehicles. However, this type of liquidation will clear a debtor completely out from under the obligation as well.