Bankruptcy law is a federal statute.  It is implemented under Article I of the United States Constitution.  It is a federal law so that bankruptcy proceedings will be uniform throughout the United States.  Generally speaking, bankruptcy is a method by which a person who owes money (known as a "debtor" under the bankruptcy code) can submit all of his or her debts and assets to the supervision of the Bankruptcy Court so that the debt may either be eliminated completely (discharged) or to allow for restructuring of the terms of the debt (reorganization) so that payment can be made (for example, by extending the time for payment or through other means allowed by the law).

Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are dealt with according to the law.