Bankruptcy legal guide.

What's the difference between Chapter 7 and Chapter 13?

Chapter 7 liquidates non-exempt assets to discharge most debts — it's faster (typically 3-6 months) and eliminates most unsecured debt entirely. Chapter 13 creates a 3-5 year repayment plan that lets you keep assets like your home while catching up on missed payments. Which one is right depends on your income, assets, and goals. Many people assume they need Chapter 13 when they actually qualify for Chapter 7.

Will I lose my house, car, or retirement savings?

Probably not. Every state has exemptions that protect certain assets — your home (often up to a substantial equity amount), one or more vehicles, retirement accounts (almost always fully protected), personal property, and tools of your trade. Most Chapter 7 filers keep everything they own. An attorney can tell you exactly what's protected in your state.

How badly does bankruptcy hurt my credit?

Bankruptcy appears on your credit report for 7-10 years, but the impact on your actual score is more nuanced. If your credit is already damaged by missed payments, collections, and judgments, bankruptcy can actually be a turning point. Many people see credit improvement within 1-2 years of filing because their debt-to-income ratio improves dramatically. You can rebuild credit with secured cards and responsible borrowing.

Which debts can't be discharged in bankruptcy?

Student loans (with very limited exceptions), most tax debts less than 3 years old, child support and alimony, criminal restitution, and debts from fraud or intentional harm generally survive bankruptcy. Most credit card debt, medical bills, personal loans, and old utility bills can be discharged. An attorney evaluates which of your specific debts qualify.

Will my employer or landlord find out I filed?

Bankruptcy filings are public records, but employers and landlords rarely search for them unless you're applying for a new job or apartment. Your current employer won't be notified unless they're a creditor. Federal law prohibits employers from firing you solely because you filed bankruptcy. Some government and financial sector jobs may check bankruptcy records.

Can I file bankruptcy if I have a job and income?

Yes. Having income doesn't disqualify you. Chapter 7 uses a "means test" comparing your income to your state's median — many working people qualify. If your income is too high for Chapter 7, Chapter 13 may be the right option. An attorney runs the means test to determine your eligibility.

How quickly does the automatic stay stop collections?

Immediately upon filing. The automatic stay stops phone calls, lawsuits, wage garnishments, bank levies, utility shutoffs, and foreclosure proceedings the moment your case is filed with the court. If a creditor continues collection activity after your filing, they may be in violation of federal law and could owe you damages.

How much does a bankruptcy attorney cost?

Chapter 7 attorney fees typically range from $1,000 to $2,500 depending on complexity and your area. Chapter 13 fees are often $2,500 to $5,000 but can usually be included in your repayment plan so you don't pay upfront. Many attorneys offer free consultations and payment plans. Not hiring an attorney to save money often costs more in the long run when mistakes lead to dismissed cases.