Filing for bankruptcy means submitting a petition to a federal bankruptcy court. You must first complete credit counseling from an approved agency within 180 days before filing. Then, you file the petition, schedules of assets and liabilities, and a means test calculation. Chapter 7 liquidates non-exempt assets to discharge most unsecured debts. Chapter 13 creates a 3-to-5-year repayment plan. Both require a filing fee, typically between $300 and $400, and a court hearing.
If you are asking this, you likely face significant unsecured debt—credit cards, medical bills, personal loans—and collection actions like wage garnishment or lawsuits. Your hardship level is high, and your financial risk is severe. You may have already tried negotiating with creditors or using a debt management plan but found the payments unsustainable. Professional review is useful here because bankruptcy has long-term consequences: a Chapter 7 stays on your credit report for 10 years, and Chapter 13 for 7 years. It also does not discharge all debts—student loans, recent taxes, and child support usually survive.
A reasonable path forward starts with gathering key documents: last two years of tax returns, pay stubs for six months, a list of all debts and assets, and monthly living expenses. Then, compare your options. Chapter 7 works if your income is below your state’s median and you have few non-exempt assets. Chapter 13 fits if you have steady income but need to catch up on secured debts like a car loan or mortgage. Non-bankruptcy alternatives include debt settlement, which can reduce balances but harms credit and may trigger tax liability, or a debt management plan through a credit counseling agency, which lowers interest but requires full repayment.
Debt relief availability depends on your state, the type of debt, your hardship level, whether accounts are current or delinquent, and the criteria of any partner programs. There is no one-size-fits-all solution.
Before you meet with an attorney or commit to any program, take the private DebtSense AI assessment on our homepage. It gives you a preliminary, confidential review of your situation based on the details you provide. No obligation, no sales pitch—just a clear starting point.
Debt question guide