• To file for Chapter 7, you must undergo credit counseling and pass a "means test."Nick Koudis/Photodisc/Getty Images
  
  Chapter 7 bankruptcy is the most common form of bankruptcy in the United States. People file for Chapter 7 when they have no hope of repaying their debts and are on the verge of being sued by their creditors. When you file Chapter 7, all legal proceedings against you are immediately ended, and your nonexempt assets are liquidated. You do not need a lawyer to file for this type of bankruptcy.
  
  

Exempt and Nonexempt Property in Maryland

• Exempt property is property that a person filing for Chapter 7 bankruptcy is allowed to keep, while nonexempt property is property that must be forfeited. In Maryland, exempt property includes a person's home, life insurance, medical insurance, personal property (up to $500), tools of your trade (up to $2,500 --- this cannot include your car); public benefits; pensions; and unpaid but earned wages. You can keep 75 percent of your earned but unpaid wages every week, or up to $415 of your wages a week, whichever is lower. Nonexempt property in Maryland includes a second car, a second residence, family heirlooms, expensive musical instruments and valuable collections.
  
  

Eligibility for Chapter 7

• There are several factors that affect an individual's eligibility for filing Chapter 7: a person's disposable income is taken into consideration, whether or not a person has attended credit counseling, and a person's results on a "means test." The means test --- which involves calculations made with your monthly earned income --- was devised to ensure that the only people who can file for Chapter 7 are people who are legitimately unable to repay their debts. With a means test, your average income is calculated against the median income of people in your area. There are free, approximated means test calculators available online for those considering filing for bankruptcy.
  
  

Dischargeable Debts

• Filing for Chapter 7 will discharge credit card debts, personal loans, money judgements and most tax liabilities, but there are some debts that cannot be cleared by this process. Filing for Chapter 7 will not erase student loans, alimony payments, owed child support or other court-ordered payments. Payments due for fraudulent tax liabilities, as well as other fraud-related debts, cannot be discharged by filing for Chapter 7.
  
  

Filing Procedures

• To begin the process, you must file an official petition, schedule and statement of financial affairs in your local bankruptcy court. The statement of financial affairs includes information on your list of creditors, a list of your property, a list of your monthly living expenses and the amount of your creditors' claims against you. Filing for Chapter 7 immediately puts a halt to any lawsuits your creditors may choose to file against you.