Chapter 7 bankruptcy is a process provided for under United States federal law.
Chapter 7 wipes out most unsecured debt and gives you a fresh start. Some common debts that are wiped out in a Chapter 7 are credit cards, medical bills, and deficiencies on repossessed vehicles.
Filing for bankruptcy puts into effect something called the "automatic stay." The automatic stay immediately stops your creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally garnish your wages, empty your bank account, go after your car, house or other property.
It is important to consult an attorney when filing Chapter 7 because most people who try and file themselves are unaware that money in their bank account and money owed from a tax return may not be exempt unless certain steps are taken.
Learn more: Chapter 13 Bankruptcy