There is no way to fully and accurately explain Chapter 7 Bankruptcy (or any chapter, for that matter) in a website entry.  The decision to file Bankruptcy, and the chapter selected, are very specific, personal choices.  The best we can give is a very general overview, but you should consult with an attorney before electing an option.

Chapter 7 is designed to eliminate most forms of unsecured debt.  "Unsecured" debt means debt where the lender does not have collateral.  The most common forms of this type of debt are medical bills, credit cards, and signature loans. With only a few exceptions, Chapter 7 eliminates the debt without obligation and without owing income taxes on the debt eliminated.  Debt settlement, in contrast, often results in nasty tax consequences that could have been avoided by a Bankruptcy filing.

The primary exceptions to this rule concerning unsecured debt are (1) most student loans, (2) certain taxes (but not all taxes), (3) domestic obligations like child support and alimony, and (4) some types of improper or intentional harms like fraud.  

With secured debt, the normal choices are to either (1) continue to make payments on the debt and retain the collateral or (2) surrender the collateral (i.e., let the creditor foreclose or repossess) and wipe out the remaining debt.  There are times where you can use Chapter 7 to renegotiate or change the debt, but (1) they are not common and (2) the situations are very fact-specific.