If you file for bankruptcy, a federal court case opens the moment your petition is submitted: an automatic court order stops nearly all collection activity against you, your property comes under the supervision of a court-appointed trustee, and — assuming you meet the requirements — the case ends with a discharge that permanently erases most qualifying debts. Under Chapter 7, that discharge usually arrives four to six months after filing. Under Chapter 13, it comes at the end of a three-to-five-year repayment plan.
Collection Activity Stops Immediately
The most immediate effect of filing is the automatic stay, a federal court order that takes effect the instant your petition is filed.1Office of the Law Revision Counsel. 11 U.S.C. 362 – Automatic Stay Creditors have to stop calling, stop mailing collection letters, and stop filing or continuing lawsuits against you. A pending foreclosure pauses. Wage garnishments stop; your employer must quit withholding. Utilities cannot disconnect service for at least 20 days after filing, although they can require a deposit for continued service after that window.
Creditors who knowingly ignore the stay can be ordered to pay your actual damages, including attorney fees, and courts can add punitive damages for willful violations. The stay stays in place through most of the case unless a creditor asks the court to lift it, which mortgage lenders commonly do when a borrower has no equity and is not making payments.
Some proceedings continue anyway. Criminal cases against you are not paused. Family law matters keep moving: establishing paternity, modifying child support or alimony, resolving custody disputes, and domestic violence proceedings all fall outside the stay. The government can still collect domestic support obligations from property that is not part of the bankruptcy estate, intercept your tax refund for overdue support, and report past-due support to credit bureaus. Regulatory and police-power actions by government agencies also continue.
Your Property Comes Under Court Control
Filing creates a new legal entity called the bankruptcy estate, which includes virtually everything you own at the moment of filing: real estate, vehicles, bank accounts, tax refunds, even legal claims you might have against someone else.2Office of the Law Revision Counsel. 11 U.S.C. 541 – Property of the Estate A court-appointed trustee takes control of the estate. In Chapter 7, the trustee looks for assets to sell to repay creditors. In Chapter 13, the trustee oversees your repayment plan.
What keeps the trustee from selling your car, your household goods, or your home is a set of legal protections called exemptions. Federal law provides one exemption list, but each state decides whether its residents can use the federal list or must use the state’s own. Roughly half of states offer the choice; the rest require state exemptions. If you have a choice, you pick one system in full — you cannot combine items from both.3Office of the Law Revision Counsel. 11 U.S.C. 522 – Exemptions
Under the federal exemptions effective April 1, 2025, the key protections are up to $31,575 of equity in your primary residence, up to $5,025 of equity in one vehicle, a wildcard exemption of $1,675 in any property plus up to $15,800 of any unused homestead amount, and full protection for funds in 401(k)s, IRAs, and similar tax-qualified retirement plans. State amounts vary widely; some states protect unlimited home equity, others cap it well below the federal figure.
In practice, most individual Chapter 7 cases are “no-asset” cases: everything the filer owns fits within the exemptions, and the trustee sells nothing.4United States Courts. Process – Bankruptcy Basics Chapter 13 filers keep their property outright and pay through the plan instead.
Which Chapter You File Shapes Everything That Follows
Individuals almost always file under Chapter 7 or Chapter 13, and the choice changes the length, cost, and mechanics of the case.
Chapter 7: Liquidation
Chapter 7 is the faster option. A trustee reviews your assets, sells anything not covered by an exemption, and distributes the proceeds. From filing to discharge, the process typically takes four to six months.
Not everyone qualifies. Before you can file, you have to pass the means test, an income-based screen the court uses to decide whether allowing you to wipe out debts through liquidation would be an abuse of the system.5Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion The test compares your average gross monthly income over the six months before filing (excluding Social Security) to the median income for a household your size in your state. Below the median, you pass automatically. Above it, a second calculation subtracts allowable expenses based on IRS standards to see whether you still qualify.
Chapter 13: Repayment Plan
Chapter 13 lets you keep your property while paying some or all of your debts through a three-to-five-year court-approved plan. You send monthly payments to a Chapter 13 trustee, who pays your creditors. To qualify, your debts must fall within statutory limits that adjust periodically; for cases filed between April 2025 and March 2028, the caps are approximately $1,580,125 in secured debt and $526,700 in unsecured debt. Homeowners often use Chapter 13 to catch up on a mortgage while stopping a foreclosure. Filers who fail the Chapter 7 means test can still file Chapter 13.
The Steps Between Filing and Discharge
Before you file, federal law requires a credit counseling session with an approved nonprofit agency, completed within 180 days before filing.6Office of the Law Revision Counsel. 11 U.S. Code 109 – Who May Be a Debtor The session can be done by phone, online, or in person, and the certificate of completion has to be filed with your petition. Skip it and the court dismisses your case.
Your petition itself is Form 101, filed with a set of schedules that list all your property, exemption claims, secured and unsecured debts, and monthly income and expenses, plus a Statement of Financial Affairs covering the last two years.7United States Courts. Voluntary Petition for Individuals Filing for Bankruptcy Everything is signed under penalty of perjury. Hiding assets or lying on the schedules is a federal crime carrying up to five years in prison.8Office of the Law Revision Counsel. 18 U.S. Code 152 – Concealment of Assets; False Oaths and Claims; Bribery Filing fees are $338 for Chapter 7 and $313 for Chapter 13, with installment plans and, for Chapter 7, income-based fee waivers available.
Twenty-one to forty days after filing, you attend a Meeting of Creditors, usually called the 341 meeting after the section of the Bankruptcy Code that requires it.9Office of the Law Revision Counsel. 11 U.S. Code 341 – Meetings of Creditors and Equity Security Holders The trustee runs it, asks you to confirm your identity and verify your schedules, and probes whether any assets were left out. Creditors are entitled to attend but rarely do. If your paperwork is in order, the meeting usually lasts ten to fifteen minutes.
After the 341 meeting, you have to finish a second required course: an approved financial management (debtor education) course, separate from the pre-filing counseling. Miss it and the court will deny your discharge, meaning you go through the entire process without any debt relief.10Office of the Law Revision Counsel. 11 U.S.C. 727 – Discharge Both courses are widely available online and generally cost between $20 and $50 each.
What Gets Wiped Out, and What Does Not
The point of the process is the discharge order, a court ruling that permanently releases you from personal liability for qualifying debts and permanently bars creditors from trying to collect them. In Chapter 7, the discharge typically arrives 60 to 90 days after the 341 meeting. In Chapter 13, it comes after you complete the repayment plan.11Office of the Law Revision Counsel. 11 U.S.C. 1328 – Discharge
Most unsecured debts go: credit card balances, medical bills, personal loans, past-due utility bills. Several important categories survive, though, and you still have to pay them.12Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge
- Child support and alimony are never dischargeable.
- Recent income taxes (generally those due within the three years before filing), taxes for which you never filed a return, and taxes tied to a fraudulent return all survive.
- Federal and private student loans survive unless you file a separate lawsuit (an adversary proceeding) and prove that repayment would cause undue hardship. Courts have historically applied a strict three-part test covering minimal standard of living, unlikely improvement, and good-faith repayment efforts. Department of Justice guidance updated in 2025 streamlines the evaluation for federal loans, but discharge still requires court approval.
- Debts obtained through fraud or misrepresentation are not discharged. Luxury purchases over $500 on credit within 90 days of filing and cash advances over $750 within 70 days of filing are presumed non-dischargeable.
- Court judgments for willful injury to another person or their property survive.
- Criminal restitution and most government fines and penalties (other than tax penalties) are not discharged.
- A debt you accidentally leave off your schedules may survive if the creditor did not learn about the case in time to file a claim.
What Life Looks Like After Discharge
A bankruptcy filing can appear on your credit report for up to 10 years from the filing date under the Fair Credit Reporting Act.13Office of the Law Revision Counsel. 15 U.S. Code 1681c – Requirements Relating to Information Contained in Consumer Reports In practice, the major credit bureaus typically remove a completed Chapter 13 case after seven years, and individual debts included in the bankruptcy fall off on the standard seven-year schedule. The credit impact is heaviest at first and eases over time; many filers start receiving offers for secured credit cards and small loans within a year of discharge.
You cannot receive a second Chapter 7 discharge if you already received one in a case filed within the prior eight years. Other combinations have different waiting periods: at least four years after a Chapter 7 discharge before receiving a Chapter 13 discharge, and at least two years between Chapter 13 discharges. These intervals run from filing date to filing date, not from discharge date.
On cost, plan beyond the court’s filing fee. Attorney fees for a straightforward Chapter 7 generally run $1,000 to $3,000 depending on where you live and how complex your finances are. Chapter 13 attorney fees are typically higher but can usually be paid through the repayment plan rather than up front. The Chapter 13 trustee also takes a percentage of each plan payment, generally 5% to 10%, for administrative costs. Add the two required courses, and total out-of-pocket costs for a basic Chapter 7 often fall between $1,500 and $4,000.