There are several types of bankruptcy filings but the most common types of personal bankruptcy are Chapter 7 and Chapter 13 bankruptcies.
Chapter 7, also known as straight bankruptcy, will eliminate many types of debt through the liquidation of your assets. Debt collectors and creditors will be stopped from collecting a debt that has already been discharged. Unsecured debts or loans that aren’t backed by collateral or a guarantor are also cleared. This includes unpaid medical bills, credit card debts, personal loans, old tax debts, unpaid utility bills, and car loans.
On the other hand, Chapter 13, which is a debt reorganization bankruptcy, aims to help you pay your debts through a monthly repayment plan that works with your current monthly income in order for you to keep your non-exempt properties.