Bankruptcy is a federal court case that stops most collection the day it is filed and, for most individuals, ends with a discharge: a court order that ends your personal duty to pay many, but not all, of your debts. Most filers use Chapter 7, where a trustee can sell property your exemptions don’t protect, or Chapter 13, where you pay a court-approved plan for 3 to 5 years. Whether to file, and under which chapter, is your decision, ideally made with a lawyer who has seen your papers. This section gives you the rules that bear on it, each with its source.
This page is general information, not legal, tax or financial advice, and not a substitute for the advice of an attorney. Bankruptcy law and exemption amounts vary by state and change. Ask a bankruptcy lawyer, legal aid or the court about your situation.
The guide follows the order most people meet these questions, and each part ends at the page that goes deeper. Amounts are those in force for cases filed on 7 November 2026.
Start with what bankruptcy is
Every consumer case rests on four parts of title 11 of the US Code. The automatic stay, a bar set by statute, stops lawsuits, garnishments, repossessions, foreclosure steps and collection calls on debts from before the filing (11 U.S.C. 362(a)). The filing creates a bankruptcy estate made up of your property on that day (541(a)). Exemptions, set mostly by your state, decide how much of that property you keep out of the case (522(b)). And the discharge ends your personal liability on the debts it covers, though it doesn’t remove a valid lien such as a mortgage or car loan (524(a)).
In the 12 months to 30 September 2026, 594,057 non-business bankruptcy cases were filed: 375,784 under Chapter 7 and 217,740 under Chapter 13 (US Courts, Table F-2). What bankruptcy is and how the chapters differ explains these pieces, who runs a case and the six chapters in use today.
What filing sets in motion
No judge has to sign anything first: the petition itself is the court’s “order for relief” (11 U.S.C. 301). Before you file you need a credit counselling briefing from an agency approved by the US Trustee Program, taken in the 180 days before filing, with narrow exceptions (109(h)). A trustee is then appointed and questions you under oath at the “341 meeting”.
The stay doesn’t stop criminal cases, several kinds of child support collection, tax audits or some evictions (362(b)). What happens when you file bankruptcy follows both chapters step by step from the day of filing.
Weighing what it does and what it costs you
Filing pauses most collection, can end your duty to pay many debts and protects what your exemptions cover. Chapter 13 can also catch up missed mortgage payments on your main home until a foreclosure sale (1322(b)(5), (c)(1)), and debt discharged in a bankruptcy case isn’t federal taxable income (26 U.S.C. 108(a)(1)(A)).
It also costs you something. A credit bureau may report the case for up to 10 years from the filing date (15 U.S.C. 1681c(a)(1)). The case file is a public record (107(a)). Property above your exemptions can be sold in Chapter 7, or must be paid for through a Chapter 13 plan (704(a)(1), 1325(a)(4)). Some debts survive, such as most student loans (523(a)), and so do valid liens. “You’ll lose everything in Chapter 7” is wrong as a general statement: your state’s exemptions and what you own decide it. The pros and cons of filing bankruptcy sets each side out with its statute.
Chapter 7 or Chapter 13: what each one does
They differ in who can use them, what happens to property and how long they take.
- Chapter 7 is liquidation. If your debts are mainly consumer debts, you go through the means test, which starts by comparing your income with your state’s median (707(b)). The discharge can come about three months after filing at the earliest. Our means test calculator shows the arithmetic, not whether a court will let you file. More in the Chapter 7 section.
- Chapter 13 is a repayment plan for an individual with regular income, lasting 3 or 5 years, with the discharge after the last payment. On the filing date, unsecured debts must be under $526,700 and secured debts under $1,580,125, for cases filed on or after 1 April 2025; the next adjustment is due 1 April 2028 (109(e)). H.R. 7730, which would replace both with one combined limit, was sent to the President on 5 November 2026 and had not become law as of 7 November 2026. More in the Chapter 13 section.
Chapter 7 vs Chapter 13 puts the rules side by side, from mortgage arrears to co-signers. It doesn’t pick one for you. What you could keep under either depends on your state’s list; the exemptions for all 50 states and DC give each amount with its statute, or say “not confirmed”.
Does the amount of debt matter?
Federal law sets no minimum debt for either chapter. You may see a $10,000 minimum on other sites; section 109, which says who may file, has none. Chapter 13 has the maximums above, and in Chapter 7 the size of your unsecured debt counts in only one narrow step of the means test. How much debt you need to file bankruptcy walks through those rules and the federal protections that apply without filing.
What it costs to file
The court fee is $338 for Chapter 7 and $313 for Chapter 13, in force since 1 December 2023: a $245 or $235 statutory fee, a $78 administrative fee and, in Chapter 7, a $15 trustee surcharge (28 U.S.C. 1930(a)(1); Bankruptcy Court Miscellaneous Fee Schedule). You can ask to pay in up to four instalments. In Chapter 7 only, the court can waive the fee if your income is under 150% of the federal poverty guideline and you can’t pay even in instalments (1930(f)). The two required courses each carry a fee, and a lawyer is a separate cost. How much it costs to file bankruptcy gives each cost and the rule behind it.
The main alternative: settling the debts
Debt settlement is a private deal with each creditor, and each creditor is free to say no. Nothing in a settlement program stops a lawsuit or garnishment while you save up, and the forgiven part is generally taxable income unless an exclusion such as insolvency applies (26 U.S.C. 108). A company may charge its fee only after it has settled a debt and you have paid on it (16 CFR 310.4(a)(5)). “Settlement is better for your credit” is a seller’s claim, not a rule. Debt settlement vs bankruptcy compares the two rule by rule, with debt management plans.
If you’re married
One spouse can file alone. The spouse who doesn’t file gets no discharge and still owes debts in both names (524(e)). If you live together and aren’t legally separated, their income usually still counts on the Chapter 7 means test form. Married couples can instead file one joint case (302(a)). Bankruptcy and your spouse covers joint and single filing, separation and divorce.
If you’ve filed before
No law limits how many times you can file. What the Code limits is how often you can get a discharge, counted from the filing date of the earlier case to the filing date of the new one:
- Chapter 7 after a Chapter 7 discharge: 8 years (727(a)(8)).
- Chapter 7 after a Chapter 13 discharge: 6 years, unless the earlier plan paid enough (727(a)(9)).
- Chapter 13 after a Chapter 7 discharge: 4 years (1328(f)(1)).
- Chapter 13 after a Chapter 13 discharge: 2 years (1328(f)(2)).
A dismissed case starts no waiting period, but it can weaken the next case’s stay: after one dismissed case in the past year it can end on day 30, and after two or more it may not start at all, unless the court orders otherwise (362(c)(3), (4)). Some dismissals bar a new filing for 180 days (109(g)). The how often can you file bankruptcy calculator shows the statute’s arithmetic between the dates you enter, beside the rules that change it; the court decides.
Your next step
- Gather: a list of your debts, income records for the last 6 months, your latest tax return and a list of what you own.
- Read: the courts’ Bankruptcy Basics and the official bankruptcy forms with their instructions.
- Ask: a bankruptcy lawyer, your local legal aid office, a law school clinic, or your bankruptcy court’s clerk and self-help pages.
- What can’t wait: a foreclosure sale date, a wage garnishment or a court date in a lawsuit. Take the papers to a lawyer or legal aid promptly, because timing can matter.
Sources checked on 7 November 2026: the US Code at uscode.house.gov (current through Pub. L. 119-138, 3 November 2026), 90 FR 8941, 16 CFR 310.4, the court fee schedule and US Courts Table F-2.
