Overwhelming Debt
Has a Legal Solution.
Start Fresh Today.

Chapter 7 eliminates most unsecured debts (credit cards, medical bills, personal loans) in 3–6 months. Requires passing the means test. Some assets may be liquidated (non-exempt assets). Chapter 13 lets you keep all assets and catch up on mortgage arrears or car payments through a 3–5 year court-approved repayment plan — ideal for homeowners wanting to stop foreclosure and people with assets to protect. Chapter 7 is faster and cheaper; Chapter 13 preserves more assets and is essential for saving a home.

Dischargeable: credit card debt, medical bills, personal loans, payday loans, utility arrears, most civil judgments, car loan deficiencies, mortgage deficiencies, older income tax debts (3+ years, filed on time), and business debts. Non-dischargeable: most student loans (unless undue hardship — though 2026 courts are more receptive), child support, alimony, recent taxes (last 3 years), debts from fraud, DUI injury debts, and criminal fines. Your bankruptcy attorney reviews every debt and advises exactly what gets eliminated.

The automatic stay is the immediate legal protection that begins the moment your bankruptcy petition is filed. It stops: all creditor calls and letters, wage garnishment, bank levies, foreclosure proceedings, vehicle repossession, civil lawsuits, utility shutoffs, and IRS collection actions. The stay takes effect instantly — even for a foreclosure scheduled for today. It remains in effect throughout your case. Creditors who violate the automatic stay face contempt of court sanctions.

Not necessarily — and Chapter 13 specifically saves homes. In Chapter 13, you cure all mortgage arrears over 3–5 years while keeping your home. In Chapter 7, whether you keep your home depends on your home equity vs. your state's homestead exemption. Many states (Texas, Florida) have unlimited homestead exemptions — you keep your home regardless of equity. Most homeowners in states with reasonable exemptions keep their homes. Your attorney calculates your specific situation before filing.

The means test determines Chapter 7 eligibility. Step 1: if your income is below your state's median for your household size, you automatically qualify — no further calculation. Step 2: if above median, calculate disposable income using IRS expense standards. Below the threshold = qualify. Above = may need Chapter 13. Median income thresholds are updated twice annually. A bankruptcy attorney runs the complete calculation for your state and household size using current 2026 figures.

Yes — immediately. The automatic stay stops wage garnishment the moment your petition is filed. Your attorney notifies your employer's payroll department and the creditor the same day. Any wages garnished after filing but before the creditor is notified must generally be returned to you. Note: garnishments for domestic support (child support, alimony) are NOT stopped by the automatic stay — all other judgment garnishments are.

Yes — it's one of the most powerful foreclosure-stopping tools available. The automatic stay halts foreclosure the moment you file — including a sale scheduled for today. Chapter 13 then lets you cure all mortgage arrears over 3–5 years through your repayment plan, as long as you continue making current payments. Chapter 7 can also stop foreclosure temporarily but doesn't resolve the underlying arrears. For emergency foreclosure defense, call a bankruptcy attorney immediately — same-day filings are possible.

The standard has significantly improved. Following 2022 DOJ/DOE joint guidance, courts are increasingly using a "totality of circumstances" test rather than the strict Brunner test. Courts evaluate: present inability to repay while maintaining minimal living standards, persistent circumstances making future repayment unlikely, and good faith repayment efforts. Many more discharges are being granted since 2023. An experienced bankruptcy attorney can evaluate whether your student loan situation may qualify for discharge through an adversary proceeding.

Subchapter V is a streamlined, cheaper Chapter 11 reorganization for small businesses. In 2026, the debt limit reverted to approximately $3.0 million (from the COVID-era $7.5M). Advantages: no creditor committee required (major cost savings), debtor retains control, a standing trustee facilitates the case, and the plan can be confirmed even without creditor approval. It's the fastest, most affordable path for small businesses to restructure debt while continuing operations. Businesses with debts over $3M must use standard Chapter 11.

Chapter 7: 10 years from filing date. Chapter 13: 7 years from filing date. However, the impact diminishes significantly over time. Most people see meaningful credit score improvement within 1–2 years of discharge through secured credit cards and on-time payments. Many bankruptcy filers achieve 650–700 credit scores within 2–3 years post-discharge — often better than their pre-bankruptcy scores when they were drowning in debt and missing payments. Your attorney provides a credit rebuilding roadmap after discharge.

Key exemptions: Homestead (home equity — from $0 to unlimited depending on state; TX and FL = unlimited), Vehicle ($2,400–$6,000+ depending on federal vs. state choice), Retirement accounts (401k/pension: unlimited; IRAs: $1.5M+ inflation-adjusted), Household goods ($14,875 federal), Tools of the trade ($2,800+), Wildcard ($1,475+ federal), Life insurance cash value (varies by state). Your attorney selects federal vs. state exemptions to maximize your protected assets. Most filers keep everything they own.

Bankruptcy is a federal legal process providing comprehensive relief from all qualifying debts simultaneously, with the automatic stay's immediate legal protection, and zero tax on discharged debt. Debt settlement is private negotiation settling individual debts for 40–60% of the balance — slow, no legal protection during negotiations, and forgiven debt may be taxable (1099-C). Bankruptcy is generally more effective for large amounts of multiple debts. Debt settlement may work for one or two specific debts you want to resolve without bankruptcy. Your attorney helps you evaluate which approach fits your situation.

Court filing fees: Chapter 7: $338 (waiver available for low-income filers), Chapter 13: $313, Chapter 11: $1,738. Attorney fees: Chapter 7: $1,000–$3,500 flat fee. Chapter 13: $3,000–$6,000 (much paid through the plan). Subchapter V: $15,000–$75,000. Standard Ch. 11: $50,000–$500,000+. LawMillion attorneys provide transparent flat-fee pricing upfront — no hourly billing surprises. Your consultation is always free.

Key 2025–2026 changes: (1) Subchapter V debt limit reverted to ~$3.0M from COVID-era $7.5M. (2) Student loan discharge standard continues to evolve — more courts using totality of circumstances. (3) CFPB finalized rule removing medical debt from credit reports (2025). (4) Means test median income thresholds updated — higher limits in many states for 2026. (5) Several states updated homestead exemption amounts. (6) Filing fees remain unchanged from 2023 — fee waivers still available for qualifying filers.

Look for: (1) Bankruptcy specialty — not general practice. (2) High case volume — experienced attorneys have seen every situation. (3) Local court familiarity — trustees and local court procedures vary significantly by district. (4) Transparent flat fees — most bankruptcy cases should be flat fee, not hourly. (5) Free initial consultation — every reputable bankruptcy attorney offers this. (6) No disciplinary actions. LawMillion verifies all these factors. Our bankruptcy attorneys offer free consultations and transparent flat-fee pricing — you know exactly what you're getting before you commit.