What is bankruptcy?

Bankruptcy laws give those who have more debt than they are able to repay a way to get a fresh start. Depending upon the type of bankruptcy filed, the consumer can gain court-ordered protection from creditors, discharge unsecured debts entirely, or enter into an organized repayment plan.

90 Days - 5 Years

Plan Length

Unsecured Debts

Type of Debts Discharged

$1,800 - $3,000



  • No impact to your taxes.
  • Usually this is the lower cost option; especially Chapter 7 Bankruptcy.
  • Chapter 7 is the fastest way out of debt. You can start rebuilding your credit right away.
  • You’re under court protection, which eliminates judgments, liens and wage garnishments, and stops all collections; even a foreclosure.


  • For a time, bankruptcy impacts your credit. Chapter 7 Bankruptcy stays on your credit report for 10 years and Chapter 13 for seven years.
  • Historically, most people who file Chapter 13 risk not completing it, which wastes money and time.
  • It may impact your immediate financial goals. Chapter 13 takes three to five years to complete.
  • It’s public. This can impact people who work in financial services or a field that requires a very clean background check.


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What are the types of bankruptcies?

There are several types of bankruptcies, but Chapter 7 and Chapter 13 are the most common forms that consumers can file.

Chapter 7

  • This is the best option, if you qualify.
  • There are limitations per state and your qualification depends on many factors, including combined income and the number of people in your household.
  • If you qualify, ultimately you can discharge all of your unsecured debt and owe nothing after the process is complete, which typically takes 90 days.
  • This filing remains on your credit for 10 years.
  • Once you’ve discharged your unsecured debt, you can get new credit card offers within a few months, qualify for a home loan in 2 to 3 years, and apply for federal student loans after 3 years.
  • You can’t file Chapter 7 again for eight years.

Chapter 11

  • Chapter 11 bankruptcy is most often filed by businesses, and allows a business or individual to reorganize their debt and pay off both secured and unsecured debts over time.
  • A court must approve a repayment plan and disclosure statement describing the plan for repayment.
  • Creditors must approve the plan after it is approved by the court.
  • If creditors do not approve the plan, a process called “cram down” can be invoked, allowing plan confirmation despite any creditors being opposed.
  • Chapter 11 cases often involve larger debt than Chapter 7 or 13 cases, are typically more complex and often are more costly.

Chapter 13

  • This is an organized repayment of debts that the courts sponsor.
  • A trustee will be responsible for your financial life for up to five years. They generate a monthly payment to themselves and a preset amount to your creditors, which is sometimes the full amount owed, but often less than your total balance.
  • If you miss one payment, the plan can be canceled and you will have to start over with a different solution.
  • Typically more than 70 percent of cases don’t complete the plan because circumstances can drastically change over a five-year period and emergencies can surface.
  • Sometimes you can convert a Chapter 13 into a Chapter 7. You may also have a shorter waiting period for filing a Chapter 13 after having previously filed a Chapter 7. Consult with a bankruptcy attorney about your situation for more information.

When should you file bankruptcy?

You should file for bankruptcy when you feel you have exhausted other options for resolving your debt and you need to start with a clean slate. This is not a decision to take lightly as it impacts your credit for seven to 10 years. However, there are times when this is the best step and is worth the effort to get a fresh start with your finances. At Resolve, we believe Chapter 7 is the best option where viable, and we rarely recommend Chapter 11 or Chapter 13.

Bankruptcy FAQs

  • How long does bankruptcy take? 
    Chapter 7 is typically completed within 90 days of filing, while Chapter 13 bankruptcy plans run for three or five years, while the plan for Chapter 11 depends on the complexity of the case.
  • Can I file bankruptcy on my own? 
    While it’s possible to file bankruptcy for both Chapter 7 and 13 without a bankruptcy attorney, it is not recommended. Most lawyers offer a free consultation.
  • How much does bankruptcy cost? 
    The average national cost for Chapter 7 is around $1,800, but this varies by location. While Chapter 13 costs vary, expect to pay at least $3,000. Costs for Chapter 11 only go up from there.
  • How will bankruptcy impact my credit?
    • We won’t sugar coat it – bankruptcy does have a big, negative impact on your credit for a long time. A bankruptcy remark will show on your credit report for 10 years after filing Chapter 7 and for seven years after filing Chapter 13.
    • With Chapter 13 there won’t be any updates to your credit report until you’re done with all the payments, which can take up to 5 years. So, it’s unlikely you’ll be able to begin to rebuild your credit until it’s complete.
    • A Chapter 7 discharge typically takes 90 days at most, you can start rebuilding credit immediately.
  • How does bankruptcy impact my home? 
    While Chapter 11 and Chapter 13 typically allow you to keep your home, the state you live in determines the amount of your home equity that is protected in a Chapter 7. Some states protect the entire value of your home and others protect very little. If you meet your state’s homestead/equity exemptions, you would continue to pay your mortgage and keep your home.
  • What happens to my car in bankruptcy? 
    Typically, you can keep your vehicles in a Chapter 11 or Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, if you’re still paying on your car loan, you can reconfirm the loan and continue to drive the vehicle. With regular payments you can eventually own your car. You could also use the Chapter 7 process to shed your loan obligation on an underwater car loan. If you own your car(s) outright, there are exemption limits in each state that will protect your vehicle.
  • When will I be able to get a credit card, loan, car and/or mortgage after bankruptcy?
    • With Chapter 7, you can apply for credit cards, loans and car loans right after discharging debts, however, the rates may not be ideal. You can apply for a mortgage two to three years after discharging as well.
    • You typically cannot get new credit approved while you are in Chapter 13, which generally runs for five years.
    • Some businesses filing for Chapter 11 protection may receive approval for new lines of credit before discharge, but it is unlikely that individuals would be.
  • If Chapter 7 bankruptcy is the right option for me, how soon can I file? 
    You can file Chapter 7 right away, which is especially useful if you’re already involved with legal collections, or have been struggling under the weight of overwhelming debt for too long.
  • Why doesn’t Resolve include all of my debts when reviewing Chapter 7 bankruptcy?
    There are a couple of situations where our system does not include all of your debt in it’s calculation:
  1. The creditor you’ve listed may not be in our system. If you do not see it listed, please check the spelling and/or contact to let us know what type of debt you are trying to enter so we can assist you.
  2. Student loans are typically not dischargeable in a Chapter 7 (be sure to talk to your attorney about yours though). Secured debts also are often left out of a Chapter 7 bankruptcy, as are other types of debts, including:
  • Child support and alimony
  • Fines, penalties, and restitution you owe for breaking the law
  • Certain tax debts, and
  • Debts arising out of someone’s death or injury as a result of your intoxicated driving.

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Find a bankruptcy attorney — Use this search engine to find a bankruptcy attorney near you.

Bankruptcy forms — Access a variety of forms associated with stages of bankruptcy proceedings.

Assess your debt – Helps you answer the question, “Do I have too much debt?”

Credit card payment calculator – Discover how long it will take to pay off your current credit card balance.

Debt management calculator – This calculator can help you calculate the savings you may get on your unsecured debt with a Debt Management Plan.

Debt consolidation calculator – Assess if debt consolidation is a viable option for you.

Why Resolve?

If you’d like to consider all of your debt relief options, Resolve is here to help. We can assess your situation and show you your options for paying off your debt, including filing bankruptcy, if appropriate. Our Resolve platform and debt guidance are free. You can review and compare debt relief paths and ask our experts questions without cost. If you then choose to work with one of our Resolve Network Partners, we would inform you of the fee for their service.  

While we currently do not offer partnerships with bankruptcy attorneys, we can connect you with licensed professionals in your state that offer a no-cost initial consult. We can also help you understand what bankruptcy would mean for your financial circumstances.

Your first step is to complete your profile here. We’re also happy to speak with you to discuss your situation further. Just 
send us a message.


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