The Essential Guide to Filing Bankruptcy Successfully Now

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The number of Americans filing for individual bankruptcy continues to climb. Filings for Chapter 7 bankruptcy — the most common kind — are up 13% so far this year, according to Epiq, a firm that tracks bankruptcy cases.

If you’re part of the growing share of consumers who are falling behind on their debt and you’re considering bankruptcy, it’s important that you understand the move can hurt your credit and limit borrowing options for years to come. But for some borrowers, it’s a necessary fresh start.

Here’s what to know about the different types of personal bankruptcy and how the process works.

Step-by-step guide to filing for bankruptcy

Bankruptcy is a federal procedure, so the basic steps hold true no matter where you live. However, local regulations do play a role in bankruptcy cases, especially in regards to property exemptions.

This guide shouldn’t be used in lieu of legal advice. Rather, treat it as an overview of what it takes to file for bankruptcy.

1. Consult a bankruptcy attorney

It’s true that you don’t necessarily need a bankruptcy lawyer; you’re allowed to represent yourself when filing for bankruptcy — aka filing pro se. However, we strongly suggest consulting an experienced bankruptcy attorney in your area before proceeding.

Research shows that legal aid will drastically increase your case’s chances of a favorable outcome. Usually, this means receiving a “bankruptcy discharge,” which is a court order that wipes away your liability for some or all the debts you can’t repay.

Fewer than half of people who represent themselves in a Chapter 7 bankruptcy case receive a discharge, according to American Bankruptcy Institute. With a bankruptcy attorney? Almost 94%. The stats for the other main type, Chapter 13, are even worse for pro se filers. (We break down the differences between the two types in depth below.)

Suffice it to say, speak with a lawyer or two near you who’s experienced with bankruptcy law. Here are a few resources to find them:

• Your state or city’s Bar Association
• National Association of Consumer Bankruptcy Attorneys
• Legal Services Corporation, a non-profit legal aid source for low-income Americans

It’s understandable that you might be hesitant to pay for an attorney when you’re already under considerable financial pressure. The good news is that you may qualify for free legal aid, either at one of the organizations listed above or at another local organization.

Many attorneys also offer free consultations or email Q&As. Take advantage of that. (The non-profit app Upsolve can help you find free consultations, resources and legal help — free of charge.)

Ask local attorneys if bankruptcy is indeed the right choice for your situation and whether they think you’ll qualify.

Before you pay to file the necessary bankruptcy forms — and put a blemish on your credit report for up to 10 years — check to see if you have any viable alternatives like debt negotiation or non-profit credit counseling. Usually the folks who choose to file for bankruptcy exhaust these alternatives first.

2. Get your financial documents in order

Now that you’ve decided bankruptcy is indeed the right course of action (and you hopefully cleared it with an attorney) you’ll need to get started on the paperwork.

Before you dive into all the official bankruptcy forms, you should get your own documents in order.

When you file for bankruptcy, you’re basically telling a federal court that you can’t afford your debts and you need assistance. Later down the line, you’ll actually need to prove that by disclosing all sorts of information about your financial affairs.

Here’s a basic list of what you’ll need on the road ahead:

• Identifying documents like your driver’s license and Social Security card
• Tax returns (up to the past four years)
• Proof of income (pay stubs, W-2s, self-employed earnings, income from assets as well as any income from government benefits)
• Bank statements and/or retirement account statements
• Proof of value of your assets, such as vehicle and real estate valuation. You may also need loan balances, proof of insurance, monthly payment amounts or related documents.
• A list of your creditors and the amount you owe them
• A detailed breakdown of your monthly living expenses

Having these documents organized upfront is crucial. For one, it can help you determine which type of bankruptcy you should file for. Two, these documents — and possibly more — may be requested by a bankruptcy trustee, who will be appointed to your case.

3. Understand your debt and settle on a course of action

Having your financial paperwork organized will help you immensely at this stage.

You’ll want to understand what type of debt you’re trying to resolve. Debts like child support, alimony and certain tax debts can’t be discharged (and bankruptcy can’t halt wage garnishment related to those debts, either). Student loan debt, on the other hand, is not impossible to discharge, but note that it is difficult to do so.

Knowing this ahead of time will help you decide whether to file Chapter 7 bankruptcy or Chapter 13 — or whether you qualify at all. Here’s how they differ:

Chapter 7 vs. Chapter 13

By a large margin, Chapter 7 bankruptcy is the most common type. The entire process is generally quicker, easier and cheaper. It’s possible to get your qualifying debts discharged within six months.

Also known as a liquidation bankruptcy, under Chapter 7, a court trustee determines whether you have assets worth selling off to your creditors. (What counts as an asset varies by state, but most Chapter 7 cases end up being “no asset,” meaning none of your property is sold.)

To qualify for Chapter 7, you must pass a “means test” that’s based on your state’s median income.

If your income relative to your debt is too high, you unfortunately can’t qualify for Chapter 7. But you do have another option: Chapter 13 bankruptcy. This option takes longer to resolve your debts because it requires a long-term repayment plan — usually three to five years — before some of your remaining debts are wiped away. The filing process is also a lot more complex than Chapter 7.

You can use this type of bankruptcy to catch up on secured debts (such as mortgages or car loans) without losing your property and without risking the liquidation of any other assets as with Chapter 7.

A Chapter 7 bankruptcy stays on your credit report for 10 years, whereas a Chapter 13 bankruptcy falls off after seven. Keep in mind that both options will have lasting impacts on your credit score, and any new debt you take out will likely come with higher interest rates.

4. Complete the first credit counseling course

Before you submit your bankruptcy forms, you must first complete a mandatory course from a credit counseling agency that has been approved by the Department of Justice (with the notable exception of filers in Alabama or North Carolina). This step is required regardless of the type of individual bankruptcy you pursue.

The course can be completed online, in person or over the phone. Courses typically cost between $15 and $50. You must complete the course within 180 days of filing for bankruptcy. Use the Department of Justice’s website to find a program.

NOTE: If you live in Alabama or North Carolina, you must choose and complete a course from a list of separately approved providers in your state.

5. Fill out bankruptcy forms

No matter the type of bankruptcy you choose, you’ll need to fill out a lengthy list of court documents.

Both Chapter 7 and Chapter 13 require you to fill out a bankruptcy petition and a statement of financial affairs, while some of the other forms are optional. The U.S. Courts website (uscourts.gov) compiles all of the bankruptcy forms you’ll need.

Additional local court forms may also be required. Again, we highly recommend you use legal aid. A bankruptcy attorney will be able to help you fully understand and properly complete all these forms to ensure your case isn’t rejected.

6. File bankruptcy forms in court

After you complete all the required forms, you must file them with your federal district’s bankruptcy court. An attorney will typically handle this for you.

If you’re filing on your own, know that there are about 90 different bankruptcy districts. Check that you’re filing with the correct one based on where you live. If your permanent residence has moved within 180 days of filling, you should file in the district where you lived the greater portion of that 180-day period.

When you file, you’ll owe a federal court filing fee of $338 for Chapter 7 or $313 for Chapter 13. If you can’t afford that amount, you can apply to have your filing fees waived. There are also fees for credit counseling and debtor education that are set locally. They can range between $20 and $100.

7. Mail documents to your court-appointed trustee

Once you submit your bankruptcy forms to the court, a bankruptcy trustee is appointed to your case.

The exact role the trustee plays in your case is slightly different for Chapter 7 and Chapter 13 bankruptcies. Broadly speaking, the trustee reviews the forms you filed with the court and may request additional information at this point to substantiate what you submitted.

Typically, your bankruptcy attorney will work with the trustee, but you may need to send the person documents such as pay stubs, tax returns, and bank account and credit card statements directly.

8. Attend the ‘341 meeting’ of creditors

The trustee who was just appointed to your case will soon set up a mandatory meeting with you, known as the “341 meeting.” This often dreaded meeting gets its name from Section 341 of the U.S. Bankruptcy Code.

Your creditors will also be invited but aren’t required to attend. In this meeting, you (and your spouse if you filed bankruptcy together) will be placed under oath and you must answer questions from the trustee and possibly from your creditors about your financial situation.

The meeting of creditors is often considered the scariest part of bankruptcy because you are asked specific questions about potentially embarrassing aspects of your financial life in a public forum. And if you don’t attend, your case could be dismissed.

The good news is that creditors often do not show up, and the meetings typically last only 10 to 15 minutes.

9. Handle nonexempt property

Depending on which chapter of bankruptcy you filed for, your “nonexempt” property is factored in differently.

Overall, the bankruptcy process allows you to exempt — or essentially protect — a lot of your real estate or personal property that is viewed as a necessity. The exemptions aren’t automatic, however. You will need to provide a timely list of what qualifies as an exemption. Exemptions may apply to non-luxury, primary vehicles; necessary home goods; and home equity (though these exemptions rules can vary widely by state).

Any property outside the list of exemptions is considered nonexempt, and if you don’t provide any list, then all your property is considered nonexempt, i.e. unprotected. Property that often isn’t eligible for exemptions includes luxury items like boats, additional cars, vacation homes or jewelry.

During a Chapter 7 bankruptcy, your nonexempt assets may be sold off by the trustee to pay your creditors.

For Chapter 13 bankruptcy, trustees don’t sell your nonexempt property, but they use its valuation when setting up your repayment plan. Say you owned a nonexempt sports car valued at $65,000. The trustee wouldn’t sell your sports car to immediately pay off the creditor. Instead, you would pay your creditors that amount over the course of your payment plan.

10. Keep making payments on your secured debts

A common misconception with bankruptcy is that once you file, you can stop paying your debts.

While bankruptcy can help you wipe out many of your unsecured debts, such as overdue credit card debt or personal loans, you’ll want to keep paying your monthly payments for secured debts if you want to keep the property. (A secured debt is usually a loan for a physical item, like a car loan.) If you don’t make payments, the lender has a right to repossess your property.

If you’re at risk of foreclosure and have exhausted all other financial-relief options, then filing for Chapter 13 may delay the foreclosure and help save your home. Ultimately, you will still need the income to continue making future mortgage payments, as well as repaying any late payments over the course of your payment plan.

11. Wait for your eligibility to be determined

Just because you’ve made it through much of the bankruptcy process doesn’t mean your debts will automatically be wiped out.

Your debts may not be discharged if there are legal exceptions for the type of debt — or if you provided incorrect, incomplete or fraudulent information while under oath or during the filing process.

There’s also a window of time during which the bankruptcy judge gives creditors and the case trustee the opportunity to object to any discharges. If they do, that kicks off a lawsuit referred to as an “adversary proceeding.”

On top of that, there’s also the possibility your case gets randomly audited by the Department of Justice. If so, you may be required to provide additional information. The audit could delay any debt relief by several weeks. Of course, if the audit turns up incorrect information, your case could be dismissed.

All that said, these are fairly rare instances. That you made it this far in the process is a decent sign at least some of your debts are eligible for discharge.

12. Complete the debtor counseling course

Before your debt can be officially discharged, you must complete a debtor counseling course, similar to the course you had to complete before you filed.

The providers of this course must also be approved by the Department of Justice (with the same exceptions for North Carolina and Alabama filers).

You typically can find the debtor education course at a cheaper price than the first course. For example, one approved provider offers the course online for $10 or cheaper. Some providers will offer to file your completion certificate directly with your local court. Whether you go that direction or file it yourself, complete this step ASAP to speed up the discharge process.

13. Wait for your discharge

How long it takes for your debts to be discharged officially depends on the chapter of bankruptcy you filed for.

For Chapter 7, if all went smoothly, discharges are typically determined about four months after you filed for bankruptcy.

It happens much later for Chapter 13: Debts are only discharged after you fulfill your three- to five-year repayment plan. If you miss payments during this time period, a judge can dismiss your case, and you’ll have to start the whole process over.

In 2024, for example, about half of Chapter 13 cases that were closed ended with a discharge after a consumer successfully completed the repayment plan, according to federal court data. And among cases that were dismissed, 51% of them cited missed payments as the reason.

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Filing for bankruptcy – FAQs

What happens when you file for bankruptcy?

If you qualify for Chapter 7 bankruptcy, your debts can be discharged within a year. With Chapter 13 bankruptcy, you’ll enter into a court-approved payment plan that can take up to five years to complete before your remaining debts are discharged.

In both cases, you’ll have to file court documents and submit paperwork related to your income and debts.

How much does it cost to file for bankruptcy?

Filing for bankruptcy costs around $350 to $500 if you do it on your own. That amount covers the required court fees and payment for mandatory credit counseling. If you hire an attorney, it will be more expensive (though your chances of successfully discharging you debt are higher if you do). Depending on the type of bankruptcy and where you live, attorney fees can run anywhere from $1,500 to more than $6,000.

Can I file for bankruptcy without a lawyer?

Yes. But court records show that people with legal support have much higher rates of success with getting their debts discharged. If you cannot afford an attorney, there are nonprofit organizations like a local Legal Services Corporation office that can offer low- or no-fee advice.

What debts are not erased by bankruptcy?

Debts like child support, alimony and certain tax debts cannot be discharged. Student loan debt is technically dischargeable, though it is difficult to do so, especially if you have federal student loans. You also cannot discharge debts that you don’t declare in the bankruptcy process.

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Summary of Money’s guide on how to file for bankruptcy

• As an everyday consumer, you have two main chapters of bankruptcy to choose from: Chapter 7 and Chapter 13. We highly recommend you first collect all your financial documents and consult with an attorney to understand which one is best for your situation.
• Before you start filing, you must take a credit counseling course and obtain a certificate of completion.
• You will need to complete several bankruptcy forms and submit them to your local bankruptcy court district.
• You will be assigned a bankruptcy trustee and must attend what’s known as the “341 meeting” to discuss your financial situation under oath.
• During the bankruptcy process, you should continue making monthly payments on your secured debt payments if you’d like to keep that property.
• Assuming your case is successful, you’ll have to complete a second course, on debt counseling, before your debts are discharged.

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