Chapter 7 is the most common type of bankruptcy proceeding. About 80% of all filers nationwide file chapter 7 and is designed to strike a bargain with your creditors: Creditors receive, through the auspices of an appointed trustee, all assets that are not protected by operation of law, in exchange for a discharge of all debts that are dischargeable. For most people, that bargain is an easy one to make because most people do not have any assets that are not legally protected and thus most people can protect all of their assets and still receive a discharge of their debts, including, but not limited to credit card debt, credit lines, medical bills, promissory notes, auto surrender deficiencies, judgments, etc.
Receiving a discharge in a bankruptcy case means that your creditors can never pursue you for the debts, with certain limited exceptions, that you owed on the date that you filed bankruptcy, even if your financial fortunes improve in the future.
Further, the filing of a bankruptcy case creates an automatic restraining order that prevents creditors from calling you to collect a debt, suing you, garnishing your wages, attaching your bank accounts or placing liens on your property. When you file bankruptcy all of your creditors are notified of the bankruptcy filing and must immediately stop any collection activities.