When you're drowning in debt and the bills seem to just keep piling up, it's tempting to do whatever it takes to bust out of that hole. And in some cases, that could mean filing for bankruptcy.
There are actually two types of personal bankruptcy filings you might consider: Chapter 7 and Chapter 13. Chapter 7 is essentially a personal liquidation -- your major assets are sold off, and the proceeds are used to wipe out your existing debt (though not all of it). Chapter 13, on the other hand, works more like a repayment plan, where your debts are consolidated and reorganized so that they're easier to pay off.
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Source: Fool.com