A full walkthrough: eligibility, what debts get wiped out, what property you keep, the timeline, and the discharge.
Chapter 7 bankruptcy, often called "liquidation bankruptcy," is the most common form of consumer bankruptcy in the United States. It allows individuals to eliminate most unsecured debts — including credit card balances, medical bills, and personal loans — in as little as three to six months.
Despite its name, most Chapter 7 filers don't actually lose any property. State and federal bankruptcy exemptions protect your essential assets, including your home, car, retirement accounts, and personal belongings. For the vast majority of filers, Chapter 7 means keeping everything you own and walking away from the debts you can't pay.
Four requirements. See our full eligibility breakdown for detail.
If your household income falls below your state's median income for your family size, you automatically qualify for Chapter 7 without further testing.
If your income is above the median, the means test evaluates your disposable income after allowed expenses. Many people above the median still qualify.
You must wait 8 years from a previous Chapter 7 discharge before filing again. There is no limit on the number of times you can file overall.
You must complete a credit counseling course from an approved provider within 180 days before filing. This can usually be done online in about an hour.
Chapter 7 discharges most unsecured debts, giving you a genuine fresh start. Common debts eliminated include credit card debt, medical bills, personal loans, deficiency balances from repossessed vehicles, utility bills, old phone bills, and certain older tax debts.
However, some debts generally cannot be discharged, including most student loans, child support and alimony, recent tax debts (typically within 3 years), criminal fines, and debts arising from fraud or intentional harm. An attorney can review your specific debts and explain exactly what will and won't be discharged in your case.
Meet with an attorney to review your situation, gather financial documents, and complete the required credit counseling course. This stage takes 1–3 weeks depending on how quickly you can gather documents.
Your attorney files the bankruptcy petition with the court. The automatic stay takes effect immediately, stopping all collection activity, garnishments, lawsuits, and foreclosure proceedings.
Approximately 30–45 days after filing, you attend a brief meeting where the bankruptcy trustee asks questions about your finances. Your attorney prepares you and attends with you. Creditors rarely show up.
Roughly 60 days after the 341 meeting, the court grants your discharge — officially eliminating your qualifying debts. The entire process typically takes 3–6 months from filing to final discharge.
In most cases, no. State exemptions protect significant equity in your home and vehicle. If you're current on your mortgage and car payments, you can generally keep both. Your attorney will review your specific asset situation. If you're behind on a mortgage and want to catch up, Chapter 13 may be a better fit.
A Chapter 7 bankruptcy can remain on your credit report for up to 10 years from the filing date. However, its impact diminishes over time, and many filers see meaningful credit improvement within 1–2 years. See our guide on rebuilding credit after bankruptcy for detail.
Your ability to file Chapter 7 depends on the means test. If you qualify, you generally have the choice. If your income is too high for Chapter 7, Chapter 13 may be your best option. An attorney can determine which chapter you qualify for during your no-obligation consultation.
Bankruptcy filings are public record, but employers don't typically search for them. Your employer will not be notified unless they are a creditor in your case. Federal law prohibits employers from firing you solely because you filed for bankruptcy.
Get a confidential, no-obligation case evaluation from an experienced bankruptcy attorney.