Filing for bankruptcy puts into effect an automatic stay – stopping creditors from trying to collect any debt from you. The automatic stay immediately stops creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies, and all other types of harassment, intimidation and scare tactics by creditors.  There are two main types of bankruptcy:  Chapter 7 and Chapter 13. 

Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, the bankruptcy court will discharge most of the debts you owe.  In exchange for this discharge, the bankruptcy trustee can take any assets you own (that are not exempt from collection) sell the assets, and distribute the proceeds amongst your creditors.

Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, a repayment plan is filed with the bankruptcy court to pay back the debts you owe over a period of time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how many assets you have.