Chapter 7 is the most common type of bankruptcy and often referred to as a straight bankruptcy. Under Chapter 7, you can quickly eliminate most of your unsecured debts by surrendering your assets. Unsecured debts are debts not secured with collateral, including most personal loans and credit cards.
Liquidation involves the sale of your assets to pay what’s owed to your creditors. Some assets such as your home or car maybe are exempt from sale, but all nonexempt assets may be included in the liquidation process.
Basically a Chapter 7 is where you give all of your property (that is not exempt or allowed to withheld from the bankruptcy) to be sold to pay any creditors. After that is done, the debts (with exception) are discharged, or no longer owed.
If your Chapter 7 bankruptcy is successful, you receive a discharge that releases you from personal liability for your debts.