Also known as “liquidation bankruptcy,” Chapter 7 is the most common of American bankruptcies. When a person files for Chapter 7, a trustee is sent to collect all of the debtor’s non-exempt assets and liquidate them into cash. This money is used to repay some or all of the debt, and after that, the person no longer owes that specific debt. They can make a fresh start, but it becomes a part of their credit history. It can be exceptionally difficult to get credit after bankruptcy.