The real cost of filing bankruptcy
Federal filing fees — $338 Chapter 7, $313 Chapter 13 — are a fraction of actual bankruptcy cost. Attorney fees, credit counseling, debtor education, and in Chapter 13 the three-to-five-year plan payments dwarf the filing fee. A typical Chapter 7 runs $1,500–$3,500 all-in. A typical Chapter 13 runs $4,000–$7,500 in attorney fees alone, plus 36–60 months of plan payments from disposable income.
The sticker price usually isn't the decision driver. The real question is which chapter gives you the outcome you need — full discharge with asset retention (Chapter 7) or structured repayment to keep a house out of foreclosure (Chapter 13).
Chapter 7 vs Chapter 13 at a glance
Chapter 7 (liquidation): Wipes out most unsecured debt — credit cards, medical bills, personal loans, some older taxes — in 4–6 months. The trustee can sell non-exempt assets to pay creditors, but most filers pass through with no asset sales because state exemptions cover everything they own. Requires passing the means test (household income below state median, or disposable income negative).
Chapter 13 (reorganization): Consolidates debt into a 3–5 year court-supervised repayment plan. You keep all your property including non-exempt assets. The plan pays some portion of unsecured debt (often pennies on the dollar) from disposable income. Used when you have regular income, significant non-exempt equity, or you're trying to catch up on a mortgage or car loan in arrears.
Attorney fee breakdown
- Chapter 7, simple: $1,200–$2,500. No business, income below means test, standard consumer debt.
- Chapter 7, complex: $2,500–$5,000. Business assets, means-test problems, recent transfers, or adversary proceedings.
- Chapter 13, "no-look" fee: $3,500–$6,500 depending on district. Pre-approved fee local courts allow without detailed billing.
- Chapter 13, complex: $6,500–$10,000+ when above no-look, or with significant motion practice.
Key difference: in Chapter 7 the attorney must be paid in full before filing (any fee owed at filing becomes part of the bankruptcy estate and can't be collected). In Chapter 13 most of the attorney fee is paid through the plan over 3–5 years, which is why people often file 13 when they can't afford the upfront cost of 7.
Required add-on costs
- Credit counseling course (pre-filing): $10–$50, sometimes free for low income. Must be completed within 180 days before filing.
- Debtor education course (post-filing): $10–$50. Required before discharge.
- Credit reports: $0–$30 if your attorney doesn't pull them.
- Court filing fee: $338 Chapter 7 / $313 Chapter 13 (fee waiver or installment payments available).
State exemptions: what you actually keep
Exemptions protect property from the bankruptcy estate. Every state has its own scheme, and 17 states let you choose federal exemptions instead. Big-ticket exemptions in 2026:
- Homestead: $0 (NJ, PA technically) to unlimited (FL, TX, IA, KS, OK, SD, DC). Federal homestead ~$27,900.
- Motor vehicle: $3,000 federal to $15,000+ in generous states.
- Household goods: $14,875 federal, varies by state.
- Retirement accounts: 401(k), 403(b), pensions fully exempt. IRAs up to ~$1.5M.
- Wildcard: $1,475–$15,000+ cash or any property.
The exemption set you qualify for is generally determined by the state you've lived in for the 730 days (two years) before filing. Moving within that window triggers a complex rule that may force you to use federal exemptions or your prior state's.
When Chapter 7 is the right move
- Most of your debt is unsecured (credit cards, medical, personal loans).
- Household income below your state's median.
- Assets fit within state exemptions (most consumer filers do).
- You want the fastest path to discharge (4–6 months).
- You haven't received a Chapter 7 discharge in the last 8 years.
When Chapter 13 makes more sense
- Behind on a mortgage and want to cure arrears over 3–5 years to avoid foreclosure.
- You have non-exempt assets you want to keep (inherited property, investment accounts, high equity).
- Income above the state median and failed the Chapter 7 means test.
- Co-signers on unsecured debt you want to protect (Chapter 13 co-debtor stay).
- Debts not dischargeable in Chapter 7 (recent taxes, domestic support, some student loans) that you need a payment structure for.
What bankruptcy does NOT discharge
- Student loans (almost never, except undue hardship)
- Recent tax debts (income taxes under 3 years old, payroll/sales tax, tax fraud)
- Domestic support obligations — child support and alimony
- Criminal fines and restitution
- Debts from fraud, drunk driving injuries, or willful/malicious harm
- Secured debts on property you want to keep — you still have to pay the mortgage or car loan
Credit impact and recovery
Chapter 7 stays on your credit report for 10 years; Chapter 13 for 7 years. Both cause an immediate 130–240 point drop for those with previously good credit. Recovery is faster than most people expect: within 12–24 months of discharge, many filers qualify for FHA mortgages, auto loans at reasonable rates, and standard credit cards. The logic is straightforward — post-bankruptcy you are a lower default risk than pre-filing because you can't file again for years.