Do I Qualify for Bankruptcy?

The Short Answer

Bankruptcy is designed for people exactly like you. Last year alone, over 550,000 Americans filed for bankruptcy protection. It's not a sign of failure—it's a legal tool that exists specifically to help people reset their financial lives when debt becomes unmanageable.

Chapter 7 Eligibility Requirements

Chapter 7 is a liquidation bankruptcy that typically erases most or all of your unsecured debt in 3–6 months. Not everyone qualifies for Chapter 7, but most people do. Here's what you need:

Chapter 13 Eligibility Requirements

Chapter 13 is a reorganization bankruptcy where you repay debt through a 3–5 year payment plan. It has looser eligibility requirements than Chapter 7 and can help you if you have a regular income and don't qualify for Chapter 7.

What Actually Disqualifies You?

The good news: very few things actually disqualify you from bankruptcy. Here are the rare exceptions:

• You filed Chapter 7 within the past 8 years: You can still file Chapter 13.
• You failed the means test: Your income is too high for Chapter 7, but you likely qualify for Chapter 13.
• You had recent fraud: If you obtained credit through fraud in the past 4 years, those specific debts may not be discharged. But you can still file bankruptcy.
• A bankruptcy was dismissed recently: If a case was dismissed in the past 180 days for cause, you'll need to wait or file under a different chapter.
• You're not a U.S. citizen: You must be a U.S. citizen, permanent resident, or have a valid Social Security number to file.

See? There's actually a path forward for almost everyone. That's why bankruptcy exists.

Frequently Asked Questions

What does the means test actually measure?

The means test compares your income to your state's median income for a household of your size. It's not about your debts—it's purely about income. If you earn less than the median, you pass and likely qualify for Chapter 7. If you earn more, you don't automatically fail. You move to the second part of the means test, which looks at your disposable income after allowable expenses. Even if you fail the means test, you almost always qualify for Chapter 13.

Do I need to be employed to file bankruptcy?

No. For Chapter 7, you don't need any income at all—you just need to pass the means test. For Chapter 13, you need "regular income," which can come from employment, Social Security, disability benefits, retirement accounts, or even consistent side income. If you're unemployed but receiving benefits or have irregular income, we can still assess your situation during the eligibility quiz.

Can I keep my house or car when I file bankruptcy?

Yes, but it depends on your situation. In Chapter 7, you can use exemptions to protect your primary home and car (up to a certain value depending on your state). In Chapter 13, you can keep your home and car even if you're behind on payments—that's actually one of the main reasons people file Chapter 13. Your bankruptcy attorney will explain exactly which assets are protected in your specific case.

How long does bankruptcy stay on my credit report?

Chapter 7 stays on your credit report for 10 years from the filing date. Chapter 13 stays for 7 years from the filing date. However, its impact decreases significantly after 2-3 years as other positive factors outweigh it. The bankruptcy will still be visible at year 9, but it matters far less than it does in year 1.

Will I lose my job if I file bankruptcy?

No. Federal law prohibits employers from firing you, demoting you, or reducing your pay because you filed bankruptcy. Your employer typically won't even know unless you're in a government or financial services job, and even then, they can't retaliate. Bankruptcy is a legal process, not something to be ashamed of.

What's the difference between Chapter 7 and Chapter 13?

Chapter 7 is a "liquidation" bankruptcy where most unsecured debt (credit cards, medical bills, personal loans) is erased, usually in 3–6 months. You must pass the means test to qualify. Chapter 13 is a "reorganization" where you set up a 3–5 year payment plan to repay some or all of your debt. You must have regular income to qualify. Chapter 7 is faster, but Chapter 13 is available to more people and lets you keep assets.

Do I have to go to court?

You'll attend one hearing (the 341 meeting of creditors) with a bankruptcy trustee and answer basic questions about your finances. This meeting usually takes 15-30 minutes. You won't go before a judge unless there's a dispute, which is rare. Most people find the experience much less intimidating than they expected.