What is Chapter 7? Chapter 7 is a form of Bankruptcy protection known as a liquidation proceeding. All, or virtually all, property is turned over to a trustee to liquidate in an effort to repay your creditors. Upon doing so you will be free from having to pay off those debts and will no longer receive creditor calls or be forced to fight collection efforts. Be prepared for a severe negative impact on your credit score for a lengthy period of time, which could be upwards of 7 years.