Bankruptcy is a legal process aimed at giving you a second chance when you get in over your head. When you declare bankruptcy, collection processes are frozen. You still owe the money, but your creditors are not allowed to sue you, seize your assets, etc until the bankruptcy case is resolved. Usually you negotiate with your creditors for a partial re payment plan, and the remainder of your debts are discharged. For some period of the time the bankruptcy will show up in your credit report, which will make it harder for you to get credit going forward, so it isn’t just a free pass. Bankruptcy is a relatively complex legal process that should be undertaken only with the assistance of a qualified attorney.