Bankruptcy protection is provided through a federal law that enables people to get their debts and obligations forgiven. This means that creditors may no longer be able to collect the debts that have been discharged. However, there are certain properties that the debtor may not be able to hold on to. These would be surrendered by the debtor to the trustee who will be in charge of selling them. The proceeds will be distributed by the trustee to the various creditors.
On the question on whether a person can back out of a bankruptcy, let us take the case first of a Chapter 7 bankruptcy. Mostly likely, the debtor may have second thoughts about filing for Chapter 7 bankruptcy after realizing that it will result in the loss of property. If he does not have sufficient income, he is not likely to be able to back out because the advantages would outweigh the disadvantages. He is bound to lose his property anyway as creditors intensify their efforts to collect unpaid debts. And if he has enough income, the court may convert his case into a Chapter 13 anyway. For a person to qualify for Chapter 7 bankruptcy, certain tests are applied to ensure that the filing is not presumptively abusive. When the debtor fails this test, his case is transformed into a Chapter 13 bankruptcy or the application is dismissed. Of course, if the case is dismissed, he may soon find himself being harassed by bill collectors once again.
Regarding the case of a Chapter 13 bankruptcy, the debtor can back out of the deal by not submitting a repayment plan. Without this plan, the case will be dismissed and he will be back to where he has started. However, it is difficult to imagine why he would want to do this unless he has suddenly found himself in possession of a substantial amount of money, in which case the creditors would all be happy because they would be able to collect. If such is the case, the petition would be dismissed by the court anyway after finding that the debtor had the capacity to repay the loans.