How to file for bankruptcy
Updated April 20, 2026 · 10 min read
Bankruptcy isn't failure — it's a federal law designed to give honest people a fresh start. Millions of Americans file every year, and for most, it dramatically improves their financial trajectory within 2–3 years. The real question is which chapter fits your situation.
Chapter 7 wipes out eligible debts (credit cards, medical bills, personal loans) in 3–6 months. You keep most everyday assets. You don't repay anything. It's available if you pass a "means test" — essentially, if your household income is below the state median or your disposable income can't fund a reasonable repayment plan.
Chapter 13 reorganizes debts into a 3–5 year repayment plan. You use it if you're behind on a mortgage or car payment you want to keep, or your income is too high for Chapter 7.
What bankruptcy eliminates — and what it doesn't
Wiped out in Chapter 7: credit card debt, medical bills, personal loans, old utility bills, most judgments, deficiency balances from repossessed vehicles, unpaid rent (usually).
Not wiped out: recent income tax debt (less than 3 years old), student loans (with rare exceptions), child support, alimony, criminal fines, DUI judgments, debts from fraud, and secured debts if you keep the asset (you can surrender the asset and wipe the debt).
What you keep — exemptions
Every state has either state exemptions (most states) or allows federal exemptions (some states let you choose). Typical exemptions:
- Homestead: $25,000–$625,000 of home equity depending on state (Florida and Texas have unlimited homestead in many cases) - Vehicle: $4,000–$7,500 per car - Household goods: $12,000–$15,000 reasonable clothing, furniture, appliances - Tools of the trade: $5,000–$25,000 - Retirement accounts (401k, IRA): Usually fully protected - Social Security: Fully protected - Wildcard: $1,000–$15,000 you can apply to any asset
Most Chapter 7 filers keep everything they own.
The process and cost
Pre-filing: Credit counseling course (~$25–$50 online). Gather 6 months of pay stubs, 2 years of tax returns, list of creditors.
Filing: Court filing fee is $338 for Chapter 7, $313 for Chapter 13. Attorney fees run $1,200–$3,500 for Chapter 7, $3,000–$5,000 (often rolled into the plan) for Chapter 13.
Meeting of creditors (341 meeting): About 30 days after filing. Brief meeting with the trustee. Usually 5–15 minutes. Creditors rarely show up.
Debtor education course: $25–$50 after filing.
Discharge: 3–4 months later for Chapter 7, 36–60 months for Chapter 13.
Total out-of-pocket for Chapter 7: $1,500–$4,000.
What life looks like after
- Credit score typically drops 100–200 points initially, recovers within 2–3 years for most filers. - New credit cards and auto loans become available almost immediately (at worse rates). - Most people qualify for an FHA mortgage 2 years after Chapter 7 discharge. - The bankruptcy stays on your credit report for 7 (Chapter 13) or 10 (Chapter 7) years. - You keep your job — it's illegal for employers to discriminate against you for filing.
Most people should hire a bankruptcy attorney. Fees are modest ($1,200–$3,500 for Chapter 7), many firms accept payment plans, and mistakes can cost you exempted assets. Consultations are free.
Get a Free Case ReviewFrequently Asked Questions
Can I file bankruptcy without a lawyer?+
Legally yes, and some simple Chapter 7 cases can be done pro se. Most people benefit from an attorney — mistakes can be expensive and some assets can be lost due to filing errors. Fees are low enough to be worth it in most cases.
Will my spouse have to file too?+
No, you can file individually even if married. If debts are joint (mortgage, joint credit cards), your spouse remains liable.
Can I keep my house and car?+
Usually yes, if you're current on payments and your equity fits within exemptions. You must keep making payments. In Chapter 13, you can catch up on missed mortgage payments over the plan.
Can I file bankruptcy on student loans?+
Usually no — student loans require proving "undue hardship" via an adversary proceeding, which is difficult. Recent policy shifts have made this slightly easier, but most student loans survive bankruptcy.
How often can I file?+
You can get a Chapter 7 discharge once every 8 years. You can file Chapter 13 sooner.
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