Title 11 of the United States Code: Chapters, Filing, and Discharge

Title 11 of the United States Code is the federal bankruptcy statute. It governs every bankruptcy case filed in the country, sets out who can file and under which chapter, defines what property becomes part of the case, and lists the debts a discharge does and does not wipe out. The Code replaced older insolvency laws with a single system supervised by the federal bankruptcy courts: honest debtors get a route to financial relief, and creditors share available assets in an orderly way rather than racing each other to grab what they can.

Everything below flows from that framework. The chapter you file under determines the shape of your case; eligibility rules decide whether you can use that chapter at all; and a handful of core mechanics — the estate, exemptions, the automatic stay, and the discharge — determine what you keep, what creditors can do, and what debts survive.

The Chapters and Who Uses Them

Title 11 is divided into chapters, each built for a different type of debtor or goal.

Chapter 7 is liquidation. A court-appointed trustee sells the debtor’s non-exempt property and distributes the proceeds to creditors; in exchange, most remaining qualifying debts are discharged. Individuals, married couples, partnerships, and corporations can file, but only individuals receive a discharge.¹

Chapter 13 is the individual repayment plan. A person with regular income keeps their property and pays creditors over three to five years under a court-approved plan. Debtors whose income falls below the state median generally follow a three-year plan; those above the median typically commit to five.²

Chapter 11 is reorganization, used mostly by businesses that want to keep operating while repaying creditors under a court-approved plan. The debtor usually stays in control as a “debtor in possession” and proposes a plan that creditors vote on. Individuals whose debts exceed the Chapter 13 limits sometimes file under Chapter 11 instead.³ A streamlined version, Subchapter V, is available to small businesses with aggregate debts of no more than $3,024,725. Only the debtor can propose a plan, and the plan must be filed within 90 days of the petition, which makes the process faster and cheaper than traditional Chapter 11.⁴

Three narrower chapters round out the system. Chapter 9 lets cities, counties, school districts, and other governmental units restructure debt; the law does not allow liquidation of a municipality’s assets.⁵ Chapter 12 is built for family farmers and fishermen with regular annual income, with repayment terms that accommodate seasonal revenue.⁶ Chapter 15 handles insolvency cases with assets or parties in more than one country, based on a United Nations model law that promotes cooperation between U.S. courts and foreign tribunals.⁷

Who Can File

Section 109 sets the eligibility rules, and they differ by chapter.

The Means Test for Chapter 7

Individuals seeking Chapter 7 must pass the means test. The first step compares the debtor’s current monthly income, annualized, to the median family income for a household of the same size in their state. If income is at or below the median, the analysis stops and Chapter 7 is available.⁸

If income exceeds the median, a second calculation subtracts allowed living expenses, secured debt payments, and priority debt payments from monthly income. If the remaining amount, projected over 60 months, is high enough under the statutory formula, the court presumes the filing is abusive; the debtor can try to rebut the presumption with special circumstances, but many are steered to Chapter 13 instead.⁸ The Census Bureau and IRS supply the expense figures, so the calculation is not just a self-reported budget.⁹

Chapter 13 Debt Ceilings

Chapter 13 is available only to individuals with regular income whose debts fall within statutory limits. A temporary law raising the ceiling to a combined $2,750,000 expired on June 21, 2024, and Congress did not extend it. The caps reverted to a two-part test: unsecured debts must be less than $526,700 and secured debts must be less than $1,580,125.² The figures are adjusted periodically, so check the current limits before filing. If your debts exceed the caps, Chapter 11 may still be available.

Credit Counseling

Before filing, an individual must complete a briefing from an approved nonprofit credit counseling agency within the previous 180 days. The briefing covers alternatives to bankruptcy and includes a budget analysis, and the certificate of completion is filed with the petition.¹⁰ Courts can grant a temporary exemption when no approved agency can provide timely services in the debtor’s district, or in cases of incapacity, disability, or active military duty in a combat zone. In an emergency, a debtor can file first and complete the briefing within 30 days, with a possible 15-day extension for cause.

Where You File

You file in the judicial district where you have lived for the majority of the 180 days before the petition. That rule blocks forum shopping for a state with more generous exemption laws. Business entities must show they are incorporated in, or have their principal place of business in, the district they choose.

What Happens to Your Property

The moment a petition is filed, a bankruptcy “estate” comes into existence. The estate includes virtually every legal or financial interest the debtor holds at the time of filing: real estate, bank accounts, vehicles, investment accounts, tax refunds, lawsuits the debtor could bring, even intellectual property.¹¹ It also sweeps in certain property acquired within 180 days after filing, including inheritances, life insurance proceeds, and property from a divorce settlement. Community property in states that recognize it is included as well.

In a Chapter 7 case, the trustee identifies and sells non-exempt assets to pay creditors. In reorganization cases, the debtor usually keeps possession of estate property while following the repayment plan.

Federal and State Exemptions

Exemptions are what keep bankruptcy from taking everything you own. They protect specific categories of property up to set dollar limits. Under federal law, debtors can choose between the federal exemption list and the exemptions of the state where they have lived for at least 730 days before filing. Some states have opted out of the federal list, forcing residents to use state exemptions only. Married couples filing jointly must use the same system.¹²

The federal exemptions, adjusted effective April 1, 2025, include:¹³

A homestead exemption of up to $31,575 in equity in the primary residence, doubled in a joint filing.
A motor vehicle exemption of up to $5,025 in equity in one vehicle.
A wildcard exemption of up to $1,675 in any property, plus up to $15,800 of any unused homestead amount. Renters benefit here, because the full unused homestead can be redirected to protect other assets.

State exemptions vary widely. Homestead protection ranges from modest caps to unlimited equity in states like Florida and Texas. Vehicle exemptions, personal property caps, and wildcards differ just as much, which is why the two-year residency rule matters.

The Automatic Stay

Filing a petition immediately triggers an injunction called the automatic stay. From the instant the petition reaches the court clerk, creditors must stop nearly all collection activity: lawsuits, wage garnishments, foreclosure proceedings, vehicle repossessions, and collection calls all halt.¹⁴ The stay applies to every creditor whether or not they have been formally notified.

The stay is broad but not absolute. Criminal cases against the debtor continue. So do actions to establish paternity or collect domestic support obligations such as child support and alimony. Government agencies keep their police and regulatory powers.¹⁴ A creditor who believes the stay is unfairly blocking their rights can also ask the court for relief; mortgage lenders and car lenders commonly do this when payments lapse during a case.

Repeat filers face limits. If a prior case was dismissed within the previous year, the stay in the new case lasts only 30 days unless the court extends it after a showing of good faith. If two or more cases were dismissed within the prior year, no stay takes effect at all unless the court affirmatively imposes one.¹⁵

Debts That Survive a Discharge

Bankruptcy eliminates many debts, not all of them. Section 523 lists nearly twenty categories that survive a discharge. Understanding which of your debts will not go away is the most important piece of planning before filing, because a case that wipes out only a fraction of your total burden may not be worth the cost or the credit impact.

The major categories of non-dischargeable debt include:¹⁶

Domestic support obligations. Child support and alimony survive every type of discharge.
Most recent tax debts. Older income taxes can sometimes be discharged if the returns were filed on time, the tax was assessed more than 240 days before the petition, and no fraud was involved.
Debts obtained by fraud, false pretenses, or misrepresentation.
Recent luxury purchases and cash advances. Consumer debts to a single creditor over $900 for luxury goods within 90 days of filing are presumed non-dischargeable, and cash advances over $1,250 within 70 days of filing carry the same presumption.
Debts for willful and malicious injury to another person or property, including damages from drunk driving.
Government fines, criminal restitution, and certain penalties.
Debts you fail to list in your schedules, if the creditor did not learn of the case in time to participate.

Student loans deserve their own note. Federal and private student loans are generally non-dischargeable unless the debtor files a separate lawsuit within the bankruptcy case, called an adversary proceeding, and proves that repayment would impose an “undue hardship.” Courts look at whether the debtor can maintain a minimal living standard while repaying, whether the hardship is likely to persist, and whether the debtor made good-faith efforts to repay before filing. Outcomes range from full discharge to partial discharge to modified repayment terms.¹⁷

A Chapter 7 discharge can also be denied entirely. Hiding or destroying assets within a year before filing, falsifying financial records, lying under oath, or failing to explain a loss of assets can cost the debtor any discharge at all. So can a prior Chapter 7 or Chapter 11 discharge within the previous eight years, or a Chapter 12 or Chapter 13 discharge within the previous six years, subject to limited exceptions.¹⁸

From Petition to Discharge

A case begins when the debtor files the petition and detailed schedules of assets, liabilities, income, and expenses, plus a statement of financial affairs covering recent transactions, gifts, lawsuits, and business dealings. Every form is signed under penalty of perjury. Filing fees are $338 for Chapter 7 and $313 for Chapter 13, and debtors who cannot pay upfront can apply for a waiver or installments.

The debtor must also provide copies of federal tax returns. The most recent return goes to the trustee at least seven days before the meeting of creditors. In a Chapter 13 case, all required tax returns for the four-year period before filing must be filed with the tax authorities before the first meeting of creditors.¹⁹ Proof of income received in the six months before filing supports the means test calculation.

Between 21 and 60 days after filing, the debtor attends the meeting of creditors — the “341 meeting,” named after the statute that requires it. The trustee presides and creditors may ask questions under oath about the schedules and the debtor’s finances. No judge is present, and in most consumer cases the meeting is brief.²⁰

There is a second education requirement that trips people up. The pre-filing credit counseling briefing is not the whole obligation. Before a discharge can be entered, the debtor must also complete a personal financial management course (sometimes called debtor education) from an approved provider, and file the certificate with the court within 60 days of the 341 meeting. Miss this step and the discharge will not be entered, even if everything else in the case is finished.

In a typical Chapter 7 case without complications, the court enters the discharge order roughly 60 days after the first date set for the 341 meeting. Start to finish usually runs four to six months. Once entered, the discharge is a permanent injunction against every creditor covered by it: no lawsuits, no calls, no letters, no other collection attempts on the discharged debts.²¹ A creditor who violates the discharge injunction can face contempt sanctions.

Chapter 13 works differently on the back end. The discharge comes only after the debtor completes all payments under the three-to-five-year plan. That is a long commitment, and roughly a third of Chapter 13 plans fail before completion. The Chapter 13 discharge is somewhat broader than Chapter 7’s, covering a few additional debt categories, but it has to be earned by years of sustained repayment.²

1
United States Courts. Chapter 7 – Bankruptcy Basics
2
United States Courts. Chapter 13 Bankruptcy Basics
3
United States Courts. Chapter 11 – Bankruptcy Basics
4
U.S. Department of Justice. Subchapter V
5
United States Courts. Chapter 9 – Bankruptcy Basics
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United States Courts. Chapter 12 Bankruptcy Basics
7
Office of the Law Revision Counsel. 11 USC Chapter 15 – Ancillary and Other Cross-Border Cases
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Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
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U.S. Department of Justice. Means Testing
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Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
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Office of the Law Revision Counsel. 11 USC 541 – Property of the Estate
12
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
13
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
14
Office of the Law Revision Counsel. 11 U.S. Code 362 – Automatic Stay
15
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
16
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
17
Federal Student Aid. Discharge in Bankruptcy
18
Office of the Law Revision Counsel. 11 USC 727 – Discharge
19
United States Bankruptcy Court. Important Information About Tax Returns
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Office of the Law Revision Counsel. 11 U.S. Code 341 – Meetings of Creditors and Equity Security Holders
21
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge