Americans filed over the past year, with Chapter 7 representing a large percentage of those cases. That makes sense considering that Chapter 7 is essentially a liquidation bankruptcy, one that offers a fresh financial start by in a matter of months. But while that type of relief can be crucial when your debt has become overwhelming, there's a catch that keeps many people from acting: the fear of losing everything they own. 

Part of the issue is that the term "liquidation" itself sounds ominous. As a result, can conjure images of losing your home, your car and everything you've worked hard to acquire. For families already struggling with , medical bills and other debts, the prospect of starting over with no assets can be scary. And, that fear alone keeps countless people trapped in debt cycles they can't escape, continuing to while interest charges pile up. 

But what many people don't realize is that the bankruptcy system isn't designed to leave you destitute. Rather, the goal is to allow you to maintain your basic standard of living while getting relief from your crushing debt. As a result, knowing exactly what you stand to lose is a crucial part of deciding .

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In a Chapter 7 bankruptcy case, a court-appointed trustee reviews your assets to see whether any can be sold to repay creditors. Assets that are are off-limits. Assets that aren't may be liquidated. Here's how that typically plays out:

Every filer is allowed to using exemptions, which are set by federal law, state law or a combination of both. If an asset's value exceeds the exemption limit or isn't covered at all, the trustee can sell it. The proceeds are then distributed to creditors.

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Many people are surprised to learn that cash, checking accounts and savings accounts aren't automatically protected during a Chapter 7 bankruptcy. that can cover cash, but if your debt balances exceed those limits, the excess may be taken to repay your creditors.

Retirement accounts like 401(k)s and IRAs are generally protected, . That means things like stocks, bonds and other non-retirement investments can be sold if they're not exempt.

Primary residences may be protected by a homestead exemption, depending on your equity in the property. However, vacation homes, rental properties, boats and recreational vehicles (RVs) and are common targets for liquidation.

High-value jewelry, collectibles, art and expensive electronics may exceed bankruptcy exemption limits. While modest personal items are typically safe, anything considered nonessential or high-value could be .

Most states for one vehicle, but only up to a certain dollar amount. If you own a car outright that's worth significantly more than the exemption, the trustee may sell it, give you the exempt amount and use the rest to pay creditors.

There's an important caveat to note, though: Many Chapter 7 cases are "no-asset" cases. That means everything the filer owns is fully exempt, and creditors receive nothing beyond what the law requires.

While Chapter 7 can provide significant relief from high-rate debt, it's still important to that don't involve bankruptcy. One of those options is , also known as debt settlement. When you enroll in one of these programs via a reputable debt relief company, the goal is to for a lower settlement in return for a lump-sum payment on the account. If successful, this can result in significant savings while allowing you to keep all your assets. 

Another option that may be worth considering is . With this option, you enroll in a program via , which helps you create a tailored repayment plan that consolidates your monthly payments and reduces your interest rates and fees. You will still owe the full balance, but you'll lower the costs by reducing the interest charges and will ultimately pay off debt without liquidation concerns.

Homeowners with significant equity might also want to consider through a home equity loan or home equity line of credit (HELOC), which allows you to pay off what's owed at a lower rate. carries its own risks, though, including foreclosure if you default on your loan or line of credit. Or, for those who primarily carry credit card debt, opting for with a 0% promotional rate can provide breathing room to pay down balances without interest for a limited time. 

offers another alternative for those who have regular income and want to keep all their assets. Instead of liquidation, you repay debts through a three- to five-year plan while protecting your property. This option works well for people who have valuable non-exempt assets they want to keep.

The fear of losing possessions keeps many people from considering Chapter 7 bankruptcy, but there are exemption protections that allow many filers to emerge from the process with their essential property intact. Before filing, though, be sure to carefully review your state's specific exemptions with a bankruptcy attorney, and take the time to explore your debt relief options, which might resolve your financial challenges without court involvement.