Bankruptcy is a serious legal tool that shouldn't be entered into lightly. Fortunately, it can – in specific situations – help you move forward toward greater financial freedom. Chapter 7 bankruptcy is a specific chapter in the federal bankruptcy laws that represents what is known as straight or liquidation bankruptcy and that can wipe your financial slate clean (regarding a variety of unsecured debts). If your bills have become insurmountable and keeping up with the costs of daily living is no longer possible, a Chapter 7 bankruptcy can work as a financial do-over that allows you to move beyond the financial rubble you find yourself in. It's important to note that Chapter 7 bankruptcy is not without serious consequences that can include relinquishing possessions and taking a serious hit on your credit score.