Chapter 7 ("liquidation")
- Wipes out most unsecured debt, usually in about 4–6 months
- Must pass a means test based on income
- A trustee can sell non-exempt property, but many filers keep everything because of exemptions
- Filing fee: $338
Chapter 13 ("repayment plan")
- A 3–5 year court-supervised payment plan
- Can stop foreclosure and let you catch up on a mortgage or car loan
- Often pays unsecured creditors only part of what's owed
- Filing fee: $313
What bankruptcy does right away
Filing triggers an automatic stay, which stops most collection calls, lawsuits, wage garnishments and bank levies the moment the case is filed. If you're being sued or garnished, that alone can matter more than anything else on this site.
Steps in a typical case
- Take a credit counseling course from an approved provider within 180 days before you file. It's required, and usually low-cost or free if you qualify.
- File the petition and schedules listing income, expenses, assets and debts.
- Attend the meeting of creditors (the "341 meeting"), usually short, where a trustee asks questions under oath. Creditors rarely show up.
- Complete a debtor education course before your discharge.
- Receive your discharge, which legally ends your obligation to pay the discharged debts.
Debts bankruptcy usually can't erase
- Child support and alimony
- Most recent tax debts
- Criminal fines and restitution
- Debts from injuries caused by drunk or drugged driving
- Student loans, unless you prove "undue hardship." Since 2022 the federal government has used a simpler process for evaluating these claims on federal loans, so it's worth asking an attorney.
The real costs
- Court fees: $338 (Chapter 7) or $313 (Chapter 13). Chapter 7 filers with low income can ask for a fee waiver or installments.
- Attorney fees: vary a lot by area and case. Many attorneys offer a free first consultation, and Chapter 13 fees are often paid through the plan.
- Credit: Chapter 7 can stay on your report for up to 10 years and Chapter 13 for up to 7. Many people see their score start recovering within a couple of years, especially if their credit was already damaged by missed payments.
When it's worth a consultation
- You can't see a realistic way to pay your debts within about five years.
- You're being sued, garnished, or facing foreclosure.
- Settlement would leave you with a tax bill or lawsuits you can't handle.
- Your debt-to-income ratio is very high. Check yours with the DTI calculator.
Free and low-cost help: legal aid, your state bar's lawyer referral service, and the official overview at uscourts.gov. You can also file without a lawyer, but it's easy to make costly mistakes.
Common questions
How much does it cost to file for bankruptcy?
The court filing fee is $338 for Chapter 7 and $313 for Chapter 13. Chapter 7 filers with low income can ask the court to waive the fee or pay it in installments. Attorney fees vary widely by location and case complexity.
How long does bankruptcy stay on your credit report?
A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the filing date. A Chapter 13 bankruptcy generally stays for up to 7 years.
What debts can't be discharged in bankruptcy?
Common examples include child support and alimony, most recent tax debts, criminal fines and restitution, debts from drunk-driving injuries, and usually student loans unless you prove undue hardship.
Bankruptcy or settlement?
They're closer than people think. Here's how they compare on cost, time and credit.
Compare themSources
- U.S. Courts, Bankruptcy basics and Chapter 7 basics
- U.S. Bankruptcy Court fee schedules (example), effective December 1, 2023
- U.S. Trustee Program, credit counseling and debtor education