Your Situation
Debt Problems
Whatever you're dealing with, there's a path forward. Learn how bankruptcy and other options may apply to your specific situation.
Credit Card Debt
Credit card debt is one of the most common reasons people file bankruptcy. Learn how it's treated and what your options are.
Credit card debt is unsecured debt — meaning there's no collateral behind it. This makes it one of the most straightforward types of debt to handle in bankruptcy. In a Chapter 7 case, most credit card debt can be completely discharged, meaning you are no longer legally obligated to pay it.
In Chapter 13, credit card debt is typically treated as unsecured debt and may be paid back at a fraction of what you owe — or nothing at all — depending on your income and expenses.
If you're only making minimum payments and your balance keeps growing, bankruptcy may be worth exploring. The interest on high-balance credit cards can make it mathematically impossible to pay off the debt without a significant change.
Frequently Asked Questions
Medical Debt
Medical bills are the leading cause of personal bankruptcy in the United States. Learn how bankruptcy handles medical debt.
Medical debt is unsecured debt, just like credit card debt. In a Chapter 7 bankruptcy, medical bills can typically be completely discharged. In Chapter 13, they are treated as unsecured debt and may be paid back at a fraction of the total amount owed.
Many people feel embarrassed about filing bankruptcy for medical debt — as if it reflects a personal failure. It doesn't. Medical debt is often sudden, large, and completely outside your control. Bankruptcy exists precisely for situations like this.
If you're being pursued by medical debt collectors, receiving threatening letters, or facing a lawsuit over medical bills, bankruptcy may provide immediate relief through the automatic stay.
Frequently Asked Questions
Lawsuits & Wage Garnishment
If a creditor has sued you or is garnishing your wages, bankruptcy can stop it immediately through the automatic stay.
When a creditor sues you and wins, they can obtain a judgment and then garnish your wages — taking money directly from your paycheck before you ever see it. In most states, creditors can garnish up to 25% of your disposable income.
Filing bankruptcy triggers the automatic stay, which immediately stops most wage garnishments. Your employer must stop withholding the garnished amount as soon as they receive notice of the bankruptcy filing.
In Chapter 7, the underlying debt that caused the garnishment can often be discharged, permanently ending the creditor's ability to collect. In Chapter 13, the debt is addressed through your repayment plan.
Frequently Asked Questions
Mortgage & Foreclosure
If you're behind on your mortgage or facing foreclosure, bankruptcy may give you time to catch up or explore your options.
Filing bankruptcy triggers the automatic stay, which immediately stops a foreclosure sale. This gives you time to explore your options — whether that's catching up on missed payments, negotiating a loan modification, or making a decision about whether to keep the home.
Chapter 13 is often the better option for homeowners facing foreclosure. It allows you to catch up on missed mortgage payments over a 3–5 year repayment plan while keeping your home. Chapter 7 can delay a foreclosure but typically doesn't provide a long-term solution for keeping the home.
If you decide you don't want to keep your home, bankruptcy can discharge your personal liability for the mortgage debt, protecting you from a deficiency judgment if the home sells for less than you owe.
Frequently Asked Questions
Car Repossession
If your car has been repossessed or you're at risk of repossession, bankruptcy may help you get it back or protect it.
The automatic stay stops repossession the moment you file bankruptcy. If your car has already been repossessed but not yet sold, you may be able to get it back by filing bankruptcy quickly.
In Chapter 13, you may be able to "cram down" your car loan — reducing the principal balance to the current market value of the car if you've had the loan for more than 910 days. This can significantly reduce your monthly payment.
In Chapter 7, you can keep your car if you continue making payments and "reaffirm" the debt — essentially agreeing to remain personally liable for it despite the bankruptcy. Alternatively, you can surrender the car and discharge any remaining balance.
Frequently Asked Questions
Tax Debt
Some tax debts can be discharged in bankruptcy. Learn which taxes qualify and what the rules are.
Tax debt is one of the most misunderstood areas of bankruptcy law. Many people assume that tax debt can never be discharged — but that's not true. Some income tax debts can be discharged in bankruptcy if they meet certain requirements.
To be dischargeable, income tax debt generally must be at least 3 years old (from the original due date of the return), the return must have been filed at least 2 years before the bankruptcy filing, the tax must have been assessed at least 240 days before filing, and the taxpayer must not have committed tax fraud or willful evasion.
Even if your tax debt is not dischargeable, bankruptcy can still help. The automatic stay stops IRS collection actions, and Chapter 13 allows you to pay back non-dischargeable tax debt over 3–5 years without penalties and interest continuing to accrue.
Frequently Asked Questions
Not sure which situation applies to you?
Call us and we'll help you figure out where you stand and what your options may be.