Relief starts the day you file. The automatic stay halts most collection calls, lawsuits, and wage garnishments. You meet your case trustee three to six weeks later, and the discharge, the court order that wipes out the debt, usually follows two to three months after that meeting. Child support, most student loans, and recent taxes survive it.
The means test comes first. Average your income over the six full months before filing, multiply by 12, and compare it with your state’s median for a household your size, from the U.S. Trustee Program’s means-testing tables. Below the median, you pass. Above it, a second calculation subtracts the expenses the law allows, and too much income left over can get the case dismissed unless you convert it to Chapter 13.
Exemptions decide what you keep. In many states, the homestead exemption shields much or all of a home’s equity, and retirement accounts, a car with modest equity, and household goods are usually protected too. The trustee can sell what isn’t, such as extra cash or a second car, but most individual Chapter 7 cases turn up nothing to sell.
Budget for the costs. The filing fee is $338. You can pay it in up to four installments or apply for a waiver if your income is under 150% of the poverty line. Nolo, a legal publisher, puts typical attorney fees at $1,500 to $2,500, usually a flat fee due in full before your lawyer files. Two required courses cost $50 or less each at most providers. The bankruptcy can also stay on your credit reports for up to 10 years.
A renter with $45,000 in card and medical debt, income below the state median, and no property beyond what the exemptions cover is the classic Chapter 7 filer. The trustee finds nothing to sell, and the $45,000 is gone in three to four months.
Book a consultation with a bankruptcy attorney, and ask whether the first meeting is free. Bring six months of pay stubs and a list of what you own, with values and loan balances.
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