Chapter 7, also referred to as Straight of Liquidation Bankruptcy, allows the debtor to discharge, or whipe out, most of their unsecured debt while keeping their car(s) and home, depending on the individual circumstances. The majority of debtors file for Chapter 7 bankruptcy, even under the new law.
Debtors filing for Chapter 7 protection must list all their assets, all their creditors (even those they are paying back) and disclose their income and expenses. If they own any assets worth a significant amount (after satisfying any liens on secured property), the Chapter 7 Trustee has the power to take possession of the property and sell it. The proceeds are then used to share among your creditors.