Chapter 7 Bankruptcy Cost And Eligibility Explained

The court filing fee is $338. Most filers also pay an attorney, typically $1,000 to $2,500 for a straightforward, no-asset case, plus $10 to $50 each for the required credit counseling and debtor education courses. Fee waivers exist for very low-income filers.

It's a two-part income test. First your household income is compared to your state's median for your household size. If you're under it, you generally qualify. If you're over it, allowed monthly expenses are subtracted to see if you have enough disposable income to instead fund a Chapter 13 repayment plan.

Most unsecured debt, including credit cards, medical bills, and personal loans. It generally does not discharge federal student loans, recent tax debt, child support, or alimony. Secured debts like a mortgage or car loan are handled separately from the discharge.

Usually not, if you keep making payments on secured debt and the equity falls within your state's exemption limits. State and federal exemptions protect a set amount of home equity, one vehicle, retirement accounts, and basic household goods for most filers.

Up to ten years from the filing date, longer than the seven years typical for late payments or a Chapter 13 case. The impact on your score tends to lessen over the first two to three years as you rebuild credit.

A typical no-asset Chapter 7 case takes about four to six months from filing to discharge. Cases involving non-exempt assets the trustee needs to sell, or contested issues, can take longer.

It depends on your state's exemptions and when you file. A tax refund is often treated as an asset, and if it isn't covered by an exemption, a trustee may be able to claim part of it. Timing your filing relative to when you receive a refund matters.

Not automatically. If your income is above your state's median, the detailed means test calculation applies, subtracting allowed expenses to find disposable income. A high income with high allowed expenses can still qualify; a high income with low expenses may not.

Chapter 7 discharges qualifying debt relatively quickly with no repayment plan, but requires passing the means test and risks non-exempt assets. Chapter 13 involves a three to five year repayment plan and is often used when income is too high for Chapter 7 or to catch up on secured debt.

Yes. Debt settlement negotiates unsecured balances down without a bankruptcy filing, and a debt management plan restructures payments through a counseling agency. Both avoid the ten-year credit report mark that comes with Chapter 7, though results and eligibility vary by situation.

Yes, but not right away. You generally must wait eight years from a previous Chapter 7 discharge to receive another one, and there are shorter waiting periods between other chapter combinations. The waiting period is a common reason people look at alternatives first.

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