What to Do Before Filing Bankruptcy: Documents, Exemptions, and Costs

What to do before filing bankruptcy comes down to five things: pick the right chapter, complete an approved credit counseling course, run the means test if you’re targeting Chapter 7, pull together your financial records, and stop making the moves that can get your case dismissed or your discharge denied. Get those right and the filing itself is mostly paperwork. Get them wrong and you can spend months in a case that ends with your debts intact.

Decide Between Chapter 7 and Chapter 13

The chapter you file under changes almost everything else about your preparation, so settle this first.

Chapter 7 is a liquidation. A court-appointed trustee reviews your assets, sells anything not protected by an exemption, and uses the proceeds to pay creditors. In exchange, most of your remaining unsecured debts are wiped out. The case typically wraps up in three to four months. It fits people with relatively low income and few assets beyond what exemptions cover.

Chapter 13 is a repayment plan. You keep your property but commit to paying back some or all of your debts over three to five years on a court-approved budget. It fits people with steady income who need to catch up on a mortgage or car loan while keeping the collateral. You can’t file Chapter 13 if your debts exceed statutory limits, and you must have enough disposable income to fund a plan.

The filing fee is $338 for Chapter 7 and $313 for Chapter 13.¹ If you qualify for Chapter 7 and have few assets, it’s usually the simpler route. If your income is too high for Chapter 7, or you need to protect property from liquidation, Chapter 13 is likely your only option.

Complete the Required Credit Counseling Course

You cannot file for bankruptcy without first completing a credit counseling briefing from a nonprofit agency approved by the U.S. Trustee Program.² The session must happen within 180 days before your filing date. You can take it by phone or online. Most sessions run 60 to 90 minutes and cost $20 to $50, though agencies must offer fee waivers if you can’t pay.

A counselor reviews your income, expenses, and debts to see whether a repayment plan outside of bankruptcy might work. At the end you receive a certificate of completion that must be attached to your bankruptcy petition. File without it and the court will likely dismiss your case immediately.

Approved agencies are listed by judicial district on the Department of Justice’s U.S. Trustee Program website.³p>

Three narrow exceptions exist. The court can waive counseling for someone mentally incapacitated to the point of being unable to make rational financial decisions, physically disabled in a way that prevents participation even by phone or internet, or serving on active military duty in a combat zone.² A waiver requires a court order after a hearing.

If an emergency forces you to file first, you can submit a certification describing the emergency and stating that you tried and failed to schedule counseling within seven days. The court may let your case proceed, but you must complete the course within 30 days of filing. The court can extend that by 15 days for good cause, and no further.²

Run the Means Test If You Want Chapter 7

The means test is an income-based calculation that decides whether you earn little enough to qualify for a full Chapter 7 discharge rather than being pushed into a Chapter 13 repayment plan.

The first step compares your average monthly income for the six months before filing to your state’s median income for a household of your size. Those medians vary by state and are updated periodically by the U.S. Trustee Program.⁴ Below the median, you pass automatically.

Above the median, the test moves to a second phase. You subtract allowed expenses, including living costs based on IRS standards, secured debt payments, and priority obligations like child support, to calculate monthly disposable income. If what remains is low enough that you couldn’t meaningfully repay unsecured creditors, you can still qualify. If it’s too high, the court will presume Chapter 7 is an abuse and you’ll need to file Chapter 13 or show special circumstances.

Because the calculation uses your income from the full six months before filing, your filing date matters. If you recently lost a job or had a significant income drop, waiting until the lower-income months make up more of the six-month window can change the outcome.

Gather the Documents You’ll Need

Incomplete paperwork is the most common reason cases stall. Start collecting records well before you plan to file.

Income Records

You must provide copies of all pay stubs or other payment records from the 60 days before your filing date.⁵ Gather six months of income data as well, because you need it for the means test.

Your most recent federal tax return must be delivered to the trustee at least seven days before your meeting of creditors.⁵ If you have unfiled returns from the past three years, get those filed too.

Bank and Financial Account Statements

Pull current statements for every checking, savings, and investment account. The court needs to see balances as of your filing date. If you’ve closed accounts recently, gather the closing statements. Trustees look closely at account activity in the months before filing.

Asset Inventory

You must list every asset you own on the bankruptcy schedules: real estate, vehicles, furniture, electronics, jewelry, retirement accounts, and anything else of value. Each item needs a current fair market value, meaning what it would realistically sell for today in its current condition. Check used-car pricing tools for vehicles and be honest about the condition of household goods. Overvaluing assets can cost you property that should have been exempt; undervaluing them invites scrutiny from the trustee.

Creditor Information

Compile the name, mailing address, account number, and current balance for every creditor: credit cards, medical bills, personal loans, mortgages, car loans, student loans, and anything else. Miss a creditor and that debt may survive your bankruptcy, because the creditor can argue they never received notice of the case and the automatic stay.

Historical Financial Records

You’ll also need to disclose income sources for the current year and two prior calendar years on Official Form 107, along with any property you transferred, sold, or gave away within the last two years and any lawsuits, foreclosures, repossessions, or garnishments from the past year.⁶ Pull your W-2s, 1099s, and any business records that document this history.

Know What Your Exemptions Will Protect

Bankruptcy does not mean losing everything. Exemption laws shield categories of property from liquidation, and understanding what yours will cover before you file is what tells you which assets are actually at risk.

The federal exemptions, for cases filed on or after April 1, 2025, include:

Homestead: up to $31,575 of equity in your primary residence.
Motor vehicle: up to $5,025 of equity in one vehicle.
Household goods: up to $850 per item and $18,075 total for furniture, appliances, clothing, and similar property.
Wildcard: up to $1,675 in any property, plus up to $15,788 of any unused homestead exemption amount.

These amounts double for married couples filing jointly.⁷

Most states also have their own exemption systems, and some are significantly more generous. A few states require you to use their exemptions; others let you choose. Which exemptions apply depends on where you’ve lived for the two years before filing. This is one area where doing your homework versus winging it can mean keeping or losing a car.

Stop Doing the Things That Wreck Cases

What you do in the months before filing matters as much as the paperwork. Certain moves made close to a filing can result in debts surviving your discharge, assets being clawed back, or criminal charges.

Don’t Run Up Credit Cards

Charging luxury goods or services totaling more than $900 to a single creditor within 90 days of filing creates a legal presumption that the debt is nondischargeable. The same applies to cash advances over $1,250 taken within 70 days of filing.⁸ “Luxury” here means anything not reasonably necessary for supporting yourself or your family. A grocery run is fine. A new television is not. These thresholds apply for cases filed between April 1, 2025, and March 31, 2028.

Don’t Pay Back Family or Friends

Repaying people you care about before filing feels right, but the bankruptcy code treats payments to insiders like family members and business partners within the year before filing as potentially recoverable. The trustee can sue the recipient to get that money back for the benefit of all creditors.⁹ Paying a family member $5,000 a few months before filing doesn’t protect them; it exposes them to a lawsuit.

Don’t Transfer or Hide Assets

Moving property into someone else’s name, selling assets for less than they’re worth, or failing to disclose what you own can result in your discharge being denied entirely. Knowingly concealing assets or making false statements on bankruptcy paperwork is a federal crime carrying up to five years in prison.¹⁰ Trustees are experienced at tracing asset movements.

Budget for the Total Cost

The court filing fee is $338 for Chapter 7 and $313 for Chapter 13.¹ If you can’t pay upfront, you can request installments. In Chapter 7 only, the court can waive the fee entirely if your household income is below 150% of the federal poverty guidelines and you can’t pay even in installments.¹¹ Fee waivers are not available for Chapter 13.

Add $20 to $50 for the pre-filing credit counseling course and a similar amount for the post-filing debtor education course you’ll take after your case opens. Attorney fees for a straightforward Chapter 7 case generally run about $1,000 to $2,500 depending on location and complexity, sometimes more. Chapter 13 attorney fees tend to be larger because the case spans years, but they’re often folded into the repayment plan.

What Happens the Day You File

Once your petition is accepted and assigned a case number, the automatic stay takes effect. This federal court order immediately stops most creditors from collection actions, including phone calls, lawsuits, wage garnishments, foreclosures, and repossessions.¹² For many people, this is the first real relief they’ve felt in months.

One catch worth knowing before you file: if you had a previous bankruptcy case dismissed within the past year, the stay in your new case lasts only 30 days unless the court extends it. If two or more prior cases were dismissed in the previous year, you get no automatic stay at all unless the court grants one.¹² Getting the filing right the first time matters.

Shortly after you file, the court schedules your meeting of creditors, where you’ll answer questions under oath from the trustee and any creditors who attend. Bring a government-issued photo ID and proof of your Social Security number. And plan for the second required course: a post-filing financial management class from a U.S. Trustee–approved provider that you must complete before the court will grant your discharge.¹³ Miss the deadline and the court can close your case without a discharge, which means you went through the whole process for nothing.

1
Office of the Law Revision Counsel. 28 U.S. Code 1930 – Bankruptcy Fees
2
Office of the Law Revision Counsel. 11 U.S.C. 109 – Who May Be a Debtor
3
U.S. Trustee Program. List of Credit Counseling Agencies Approved Pursuant to 11 U.S.C. 111
4
U.S. Trustee Program. Census Bureau Median Family Income By Family Size
5
Office of the Law Revision Counsel. 11 U.S.C. 521 – Debtor’s Duties
6
U.S. Courts. Statement of Financial Affairs for Individuals Filing for Bankruptcy
7
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
8
Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge
9
Office of the Law Revision Counsel. 11 U.S.C. 547 – Preferences
10
Office of the Law Revision Counsel. 18 U.S. Code 152 – Concealment of Assets; False Oaths and Claims; Bribery
11
U.S. Department of Justice. Notice to Chapter 7 Trustees re: Bankruptcy Filing Fee Waivers
12
Office of the Law Revision Counsel. 11 U.S.C. 362 – Automatic Stay
13
Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge