Chapter 7 is commonly referred to as a “liquidation” because your nonexempt property will be sold and the proceeds will be distributed to your creditors. Once this process is complete, you will get a totally fresh start—you will not have to worry about payment plans or continuing to be involved with the bankruptcy court.
The typical situation where Chapter 7 Bankruptcy is used is when someone does not have much nonexempt property, and they have a lot of unsecured debt, such as credit card debt. You can have your debt discharged quickly in a Chapter 7 bankruptcy, and all of the income or assets you receive after filing bankruptcy are yours to keep.
There are some potential downsides to Chapter 7 bankruptcy. You may lose your property. If you have an asset that is not covered by your California bankruptcy exemptions, you may be forced to sell it and pay the proceeds to your creditors. You may also only file a Chapter 7 bankruptcy if it has been at least 8 years since you previously received a discharge in a Chapter 7 case.