when a debtor declares bankruptcy the court notifies the creditor of the proceedings in some bankruptcy cases all of the debtor s non essential assets are sold to repay debts and the bankruptcy trustee repays the debts in order of their priority 
tax debts and child support typically rank highest along with criminal fines and overpayments of federal benefits for repayment unsecured loans such as credit cards are prioritized last giving those creditors the smallest chance of recouping funds from debtors during bankruptcy proceedings original creditor vs debt collectorwhile creditors lend money and are owed that money a debt collector does not lend money a creditor is the original lender because they made the loan to you debt collectors purchase delinquent loans from the original creditor such as a bank usually at a discount and aim to then collect on that loan for example john may owe bank abc 10 000 dollars but has not been able to pay it back his loan goes into default rather than continuously attempting to collect on this loan bank abc sells the loan to debt collector xyz for 6 000 this way the bank has recouped some of its losses and can focus on its core business of lending not chasing down delinquent loans debt collector xyz then seeks to collect the entire 10 000 from john which it is legally allowed to do 