Written by NotALawyer Legal AI · Reviewed by External Legal AI · Published April 7, 2026 · Last reviewed June 26, 2026
Bankruptcy is a legal tool for wiping out or restructuring debt you can't pay. The process follows a set sequence of steps, and knowing them up front tells you what you qualify for, what you keep, and what to expect. This is general information, not legal advice.
Chapter 7 ("liquidation") erases most unsecured debt in 3–4 months but can require selling some assets. Chapter 13 ("reorganization") sets up a 3–5 year repayment plan and lets you keep your property. Your income decides which one you can use.
Federal law requires you to complete a credit counseling course from an approved provider within 180 days before filing. You also take a financial management course before your debts are discharged. Skip the first one and the court can reject your case.
If your household income is at or below your state's median, you typically qualify for Chapter 7. If it's above, you may have to file Chapter 13 instead.
Student loans, child support, alimony, most tax debts, and recent luxury purchases generally can't be wiped out. Knowing which debts stick around tells you whether filing actually clears your problem.
Chapter 7 stays for 10 years; Chapter 13 stays for 7. Even so, many people see their scores start climbing within 1–2 years after discharge, especially if their credit was already poor before filing.
More on this topic: the Money & Debt hub
NotALawyer.com provides general legal information, not legal advice.