Child support, most student loans, penalties owed to a court, and homeowner's association fees generally survive a bankruptcy filing. Credit card balances and medical bills are the debts that go, and for someone buried in them the relief is real.
But the filing costs money, moves at a court's pace, and sits on a credit report for years afterward.
Liquidation Under Chapter 7, a Payment Plan Under Chapter 13
Six types of bankruptcy exist. Individuals almost always end up looking at two of them, and the two work in opposite directions.
In Chapter 7, a court-appointed trustee liquidates assets to pay creditors. Some property is exempt, and which property qualifies depends on the state.
Most remaining debt is then discharged, meaning there's no further obligation to pay it. Secured loans and student loans that don't qualify are the exceptions.
Chapter 13 keeps the property and replaces liquidation with a court-approved monthly payment plan. The plan is what stops foreclosure, since delinquent mortgage payments get folded into it and paid over time. It also halts collector calls and shields co-signers from collection efforts.
Income and Debt Limits for Each Chapter
There's no official minimum amount of debt required to file. The limits run the other way.
For Chapter 7, income has to be low enough relative to debt. The filer needs to show they can't realistically handle what they owe through a repayment plan.
Chapter 13 is open to any individual but caps the debt: unsecured debt can't exceed $526,700, and secured debt can't exceed $1,580,125.
Someone with too much income for Chapter 7 and too much debt for Chapter 13 has a genuinely difficult case, and that's the situation where legal help stops being optional.
Debts That Survive a Discharge
This is the part that surprises people most often. Debts generally not wiped out by bankruptcy include:
- Select unpaid taxes
- Select luxury goods and cash advances obtained 70 to 90 days before filing
- Alimony and child support
- Fees and penalties owed to a court or government entity
- Debt from causing death or personal injury to someone in a DUI
- Debts from maliciously injuring another person or destroying their property
- Debts left off the bankruptcy paperwork
- Debts obtained fraudulently
- Homeowner's association fees
Student loans stay too, unless the filer can prove that repaying them would cause "undue hardship" to themselves and their dependents.
The chapters differ here as well. Chapter 13 can discharge some debts that Chapter 7 cannot: malicious destruction of property, debt taken on to pay taxes, and property settlements from a divorce agreement.
That 70-to-90-day window is worth picturing concretely. Someone who takes a large cash advance or buys expensive goods on credit a few weeks before filing may find that specific balance treated differently from the rest. The timing of the charge matters as much as the amount.
Filing Fees, Course Fees, and the Attorney's Bill
Filing costs money even though the person filing is, by definition, short of it.
| Item | Chapter 7 | Chapter 13 |
|---|---|---|
| Filing fee | $245 | $235 |
| Administrative fee | $78 | $78 |
| Trustee fee | $15 | Not specified |
| Stays on credit report | 10 years | 7 years |
| Typical length | Four to six months | Three or five years |
Chapter 7 fees can be paid in installments, or waived if income falls below 150% of the poverty line and installments aren't workable. Chapter 13's two fees can also be paid in installments.
Two educational courses are required, each costing a maximum of $50. Filers with income below 150% of the poverty line can ask the course provider to waive the fee.
Then there's the real expense: an attorney typically runs about $1,500 or more. Filing without one is possible, as is using a nonprofit filing tool such as Upsolve, though complex cases are where professional help matters most.
Chapter 7 Takes Months, Chapter 13 Takes Years
The clock starts before the filing does. Paperwork has to be completed and a credit counseling course finished first.
A Chapter 7 case generally runs four to six months. Discharge takes at least 90 days, and creditors have 60 days to object to it, which can stretch the timeline. So can skipping the required debt education course.
Chapter 13 is measured in years. Income below the state median means three years to repay; income above the state median for a family of the same size means five.
During the plan, no new debt can be taken on without consulting the trustee, and nothing is discharged until every payment has been made on time. Missing payments can get the case dismissed, unless the cause was outside the filer's control.
Seven to Ten Years on a Credit Report
Chapter 7 remains on a credit report for 10 years; Chapter 13 drops off after seven. For both, the individual accounts included in the filing are deleted seven years from the original delinquency date.
The size of the score damage depends on where the score started. According to FICO, someone with excellent credit should expect a large drop.
Someone who already has missed payments or accounts in collections dragging the score down may see a smaller dip, because much of the damage already shows up there.
Creditors Can Question the Filer Under Oath
Both Chapter 7 and Chapter 13 require attending a meeting of creditors. The filer is placed under oath and has to answer questions about their finances.
Anyone owed money is allowed to attend, and in a Chapter 7 case the trustee may ask questions as well. The meeting also confirms that the filer understands the alternatives and is prepared for what follows.
Bankruptcy is a court proceeding, so the filing goes on the public record rather than staying between borrower and lender.
Employer Credit Checks, and the Places That Limit Them
In most states, employers are allowed to make hiring decisions based on credit report information, and a credit check is especially likely for roles handling money or sensitive data. Because the filing sits on the report for seven to 10 years, a future employer may see it.
Some places restrict or prohibit employer credit checks, including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, plus Chicago, New York City, Philadelphia, and Washington, D.C.
Debt Consolidation and Nonprofit Credit Counseling
Bankruptcy isn't the only route through unmanageable debt. Debt consolidation is one alternative, though it depends on qualifying for a low enough interest rate, and badly damaged credit is what makes that hard.
A nonprofit credit counseling agency can also lay out whether a repayment plan is realistic. For some people those options close off, and bankruptcy is what's left.
The Paperwork, and Where Filers Slip Up
The bankruptcy code is dense, and the administrative load is steady: forms to complete, two courses to sit through, the creditors meeting, court hearings.
Cases involving student loan discharge are among the most complicated. One common pitfall is incomplete disclosure. Debts left off the paperwork aren't discharged, so an overlooked account can outlive the case.
What Separates the Two Chapters
Chapter 7 is the shorter, cheaper path, and it asks for assets in exchange; it's built for filers whose income can't support any repayment plan.
Chapter 13 asks for years of disciplined payments and keeps the house, which is why it tends to be the route for people with property to protect and debt under the statutory caps.
Two things do most of the work in deciding how either one turns out: which specific debts would actually be discharged, and whether a repayment plan or counseling arrangement is still within reach. Both vary case by case, and both are knowable before the first form gets filled out.
