We owe maintenance fees for a property that we own w/ Blue Green Corp.

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Bankruptcy

About Bankruptcy

Bankruptcy is a federal court process that provides legal relief from overwhelming debt. US bankruptcy law lives in Title 11 of the United States Code and is administered by federal bankruptcy courts in every district. There is no state bankruptcy.

The two consumer chapters are:

Chapter 7 (liquidation) — most consumer debts (credit cards, medical bills, unsecured loans) are discharged within 4 to 6 months. A trustee may sell non-exempt assets, though most filers have no non-exempt assets to sell. Available only if you pass the means test, which compares your income to your state's median.
Chapter 13 (reorganization) — you keep your assets and repay creditors a portion of what you owe over 3 to 5 years under a court-approved plan. The remaining unsecured debt is discharged at the end. Often used to save a home from foreclosure or a car from repossession.

Filing a bankruptcy petition immediately triggers the automatic stay, which stops most collection actions: wage garnishment, lawsuits, foreclosure sales, repossessions, and most utility shutoffs. The stay is a powerful tool and one of the most important reasons people file.

Not all debt is dischargeable. Common non-dischargeable debts include most student loans (with narrow exceptions), recent income taxes, child support and alimony, debts from fraud or willful injury, and criminal restitution.

Exemption laws — what you get to keep — vary by state. Some states require you to use the state exemptions; others give you a choice between state and federal exemptions. Typical exemptions cover a primary residence (homestead exemption), one vehicle up to a value cap, household goods, retirement accounts, and tools of trade. Retirement accounts are fully protected in bankruptcy in nearly every state.

A Chapter 7 discharge stays on your credit report for 10 years and a Chapter 13 discharge for 7 years, but most filers see their credit scores recover within 12 to 24 months. You can usually get a new credit card within months and a mortgage within 2 to 4 years.

Bankruptcy filings require court-approved credit counseling before filing and a debtor education course before discharge.

Reviewed by AttorneyQnA Editorial Team · Last updated Jun 10, 2026

Relevant law

11 USC §362 Statute

Automatic stay

Filing a bankruptcy petition immediately stops most collection actions — wage garnishments, foreclosure sales, repossessions, and most utility shutoffs.
11 USC §523 Statute

Non-dischargeable debts

Lists debts that survive a Chapter 7 discharge: most student loans, recent income taxes, child support, debts arising from fraud, drunk-driving damages.
11 USC §707(b) Statute

Chapter 7 means test

Compares filer's income to state median; if above median, additional analysis of disposable income determines whether Chapter 7 is available or whether the case must be converted to Chapter 13.

Common questions about Bankruptcy

Will I lose my house if I file bankruptcy?

Almost always no — provided your equity is within your state's homestead exemption. In Chapter 7, the trustee can only liquidate non-exempt assets. In Chapter 13, you can use the repayment plan to catch up on mortgage arrears and stop a foreclosure sale. Most filers keep their homes.

Will bankruptcy clear my student loans?

Usually no. Student loans (both federal and most private) are excluded from discharge under Bankruptcy Code §523(a)(8) unless you prove "undue hardship" — a high bar called the Brunner test that few debtors satisfy. Recent administrative guidance from the Department of Education has made hardship discharge somewhat more accessible.

How long does bankruptcy stay on my credit report?

Chapter 7 stays on your credit report for 10 years; Chapter 13 for 7 years. Practically, most filers see their credit scores recover within 12 to 24 months, can get a new credit card within months, and can qualify for a mortgage within 2 to 4 years post-discharge.

Can I keep my car in bankruptcy?

In Chapter 7, yes if your equity is within the vehicle exemption. If the car is financed, you must stay current on payments and (in most cases) sign a reaffirmation agreement to keep it. In Chapter 13, you can roll past-due car payments into the plan and "cram down" the loan to current value if the loan is older than 910 days.

What debts cannot be discharged in bankruptcy?

Common non-dischargeable debts include: recent income taxes (3-year and 240-day rules), most student loans, child support and alimony, debts arising from fraud or willful injury, drunk-driving damages, and criminal restitution. Most credit-card debt, medical bills, and personal loans are dischargeable.

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