The walkthrough
Start to finish, in plain language. The rules on this page are federal, so they are the same in every state. The dollar amounts that differ by state live on the Texas rules page.
Consumer bankruptcy almost always means Chapter 7 or Chapter 13. The difference comes down to your income and what you want to keep.
For people with limited income and mostly unsecured debt. Despite the word "liquidation," most people lose nothing, because state exemptions protect what they own.
For people with steady income who are above the median, or who need to protect something a Chapter 7 trustee could reach, like mortgage arrears.
A typical Chapter 7 follows the same path. Most of it is paperwork and waiting, not courtrooms.
Take an approved credit counseling course online or by phone. It is required within 180 days before you file and usually takes about an hour.
Pull together pay stubs, tax returns, and a list of debts and property. The means test compares your income to your state's median for your household size.
Your attorney files the petition and schedules with the federal bankruptcy court for your district. The filing fee is roughly $338 for Chapter 7.
The moment you file, an automatic stay legally stops collection calls, lawsuits, wage garnishment, and most foreclosure activity. The pressure stops that day.
About 3 to 4 weeks later you attend a short meeting with the trustee to confirm your paperwork. Creditors rarely show up. It usually lasts a few minutes.
Complete a second short course after filing. It is the last requirement before your discharge.
Roughly 60 to 90 days after the 341 meeting, the court issues your discharge. The qualifying debt is legally gone. Start to finish is about four months.
Bankruptcy is powerful on some debts and useless on others. Knowing the difference tells you whether it is worth filing at all.
Shame and bad information keep people paying on debt that will never go away. Here is the truth.
Bankruptcy is in the Constitution and hundreds of thousands of Americans use it every year. Most debt that ends in bankruptcy was built by job loss, medical bills, or 20-plus percent interest, not recklessness. It is a legal tool built for exactly this.
Usually none of it, and in Texas especially. Home equity, retirement accounts, and a vehicle are typically protected by exemptions. See the Texas rules for the specifics.
It is a 7 to 10 year mark, not a 10 year sentence. Scores often begin climbing within months because your debt-to-income collapses. People commonly get car loans within a year and an FHA mortgage about 2 years after discharge.
It is public record, but in practice nobody checks. It is not in the newspaper, your employer is not notified, and friends and family will not know unless you tell them.
Federal law bars an employer from firing you for filing and bars the government from denying you a job over it. For security clearances, resolving debt often helps rather than hurts.
A Chapter 7 typically runs about $1,000 to $2,000 in attorney and filing fees, sometimes payable over time, and it erases far more than that. The cost of staying in the debt is almost always higher.