Find out which is right for you
Find out if you are eligible for Chapter 7 bankruptcy
It depends mostly on where you live.
Bankruptcy is a powerful tool for debtors, but some kinds of debts can't be wiped out in bankruptcy
When bills become unmanageable, such as after a divorce, illness, or job loss, bankruptcy provides a filer with a financial safety net. It works by wiping out or “discharging” qualifying debt—credit card balances, overdue utility bills, personal loans, gym memberships, and more—and giving the filer a fresh start. If you’re considering filing for bankruptcy, you’ll want to learn what each chapter can and cannot do.
Individuals often file for Chapter 7 bankruptcy because it’s quick and doesn’t require debtors to repay creditors. Higher-income earners who make too much for a Chapter 7 discharge can file for Chapter 13 bankruptcy. Although a debtor must pay back some amount through a Chapter 13 repayment plan, Chapter 13 has other benefits, like preventing a home foreclosure or car repossession and reducing the amount owed on secured debt. Both bankruptcy chapters stop harassing debt collectors and put an end to wage garnishments, creditor lawsuits, and other collection actions.
Filing for bankruptcy will affect your credit score, but it will improve with time—and often far sooner than most filers expect. In fact, many people find that filing for bankruptcy repairs credit faster than would be possible otherwise.
Bankruptcy isn’t just for individuals with consumer debt problems. Filing can benefit a small business owner by minimizing personal liability after a company closure or by helping a small business return to profitability.
Finally, no one wants to file for bankruptcy. If you need bankruptcy help but have reservations, you’re not alone. Not only have employers laid off staggering numbers of workers due to the coronavirus outbreak, but companies large and small are closing at a record pace—and many businesses will seek bankruptcy relief. But that’s not as bleak as it might seem. Each fresh start—including yours—moves the economy one step closer toward recovery.
When considering filing for bankruptcy, it can be challenging to make sense of the bankruptcy process and the available options. Our bankruptcy guide not only answers your bankruptcy questions but explains the three types of bankruptcy available, Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy, so you can navigate the bankruptcy process successfully when filing for bankruptcy in 2023.
Asking yourself, "What is bankruptcy?" is common when facing financial challenges. But there are several types of bankruptcy, not just one, that help when illness, divorce, foreclosure, or job loss strikes. For bankrupt individuals, the three types of bankruptcy are Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy. Each of these types of bankruptcy can give you a fresh start. Not only does this article answer the question, "What is bankruptcy," but you'll learn how bankruptcy works and the differences between the three types of bankruptcy, Chapters 7, 13, and 11 so you can choose the best type of bankruptcy for you.
Explore alternatives to Chapter 7 or Chapter 13 bankruptcy before you file. You may be able to settle your debts, get credit counseling, or simply do nothing and stop paying.
What Bankruptcy Can and Cannot Do
Bankruptcy is a powerful tool for debtors, but some kinds of debts can't be wiped out in bankruptcy. Find out if your debts are dischargeable.
Chapter 7 v. Chapter 13 Bankruptcy
Check out our handy table listing the differences between Chapter 7 and Chapter 13 bankruptcy.
How to Get and File the Bankruptcy Forms
Learn where to find the official bankruptcy forms, how to find out about local forms and requirements, and where to file your forms.
Filing an Emergency Bankruptcy
If you need to file for bankruptcy in a hurry to stop creditors harassing you, prevent a foreclosure, or stop a car repossession, you can file several forms to start, and the rest within 14 days. This is called an emergency bankruptcy.
How Bankruptcy Stops Your Creditors: The Automatic Stay
The automatic stay in bankruptcy protects you from creditor actions like foreclosure, wage garnishment, and repossession. Here is how it works.
Types of Creditor Claims in Bankruptcy: Secured, Unsecured & Priority
Learn about secured, unsecured, and priority debts in bankruptcy.
Bankruptcy Exemptions: An Overview
Bankruptcy exemptions protect important property - like your home, your car, and your retirement accounts. Each state has different exemptions. Find out how bankruptcy exemptions protect your assets from creditors here.
The Homestead Exemption in Bankruptcy
Learn how much home equity you can protect using the homestead exemption in bankruptcy and other requirements you must meet to keep a home in bankruptcy. All bankruptcy filers can keep a house if the homestead exemption protects all home equity. The Chapter 7 bankruptcy trustee will sell the home if the homestead exemption doesn't fully protect the home's equity. Chapter 13 filers can keep a home that isn't fully covered by the homestead exemption if they can afford to pay creditors the uncovered amount through the bankruptcy plan.
The Bankruptcy Means Test: Are You Eligible for Chapter 7 Bankruptcy?
Find out if you're eligible for Chapter 7 bankruptcy by learning about the Chapter 7 bankruptcy means test. We explain the calculation process you'll use to determine whether you'll qualify for Chapter 7 bankruptcy.
Is Chapter 7 Bankruptcy the Right Choice for You?
Before you file for Chapter 7 bankruptcy, decide if it makes financial sense.
An Overview of Chapter 13 Bankruptcy
People who earn a significant income or want to protect valuable property will file for Chapter 13 bankruptcy. In exchange for debt relief, these filers pay their discretionary income to creditors in a three- to five-year repayment plan. Learn how the Chapter 13 bankruptcy process works, including how much you'll pay in your Chapter 13 repayment plan.
Can Bankruptcy Help If I Want to Continue Running My Business?
Depending on your goals, bankruptcy can help business owners wipe out debt and close up shop, or continue operating with reduced debts. Find out if bankruptcy can help your struggling business keeps its doors open.
Chapter 13 v. Chapter 11 Bankruptcy for Small Business Owners
Learn about the differences between Chapter 11 and Chapter 13 business bankruptcies.