Bankruptcy Lawyer Overview
Last updated: April 10, 2026
What Does a Bankruptcy Lawyer Do?
A bankruptcy lawyer helps individuals and businesses navigate the federal bankruptcy process to eliminate or restructure overwhelming debt. Bankruptcy is not a failure — it's a legal tool designed to give honest debtors a fresh start when they can no longer pay their bills.
Filing for bankruptcy can:
- Stop creditor harassment immediately through the automatic stay
- Stop foreclosure proceedings on your home
- Stop wage garnishment by creditors
- Eliminate most unsecured debt (credit cards, medical bills, personal loans)
- Protect essential assets through bankruptcy exemptions
- Provide a fresh financial start
Chapter 7 vs. Chapter 13 Bankruptcy
The two main types of personal bankruptcy:
| Aspect | Chapter 7 | Chapter 13 |
|---|---|---|
| Type | Liquidation | Reorganization |
| Duration | 4-6 months | 3-5 years |
| Eligibility | Income below state median | Regular income required |
| Debt discharged | Most unsecured debts | Some debts after plan completion |
| Asset protection | Some assets may be sold | All assets protected |
| Best for | Low income, few assets | Higher income, want to keep property |
| Cost | $1,500-$3,500 | $3,000-$6,000 |
What Debts Can Be Discharged?
Discharged in Chapter 7:
- Credit card debt
- Medical bills
- Personal loans
- Older tax debts (with conditions)
- Business debts
- Utility bills
- Most lawsuits and judgments
Generally NOT Discharged:
- Recent tax debts
- Student loans (with rare exceptions)
- Child support and alimony
- Court fines and restitution
- Debts from fraud
- DUI-related claims
When Bankruptcy Makes Sense
Consider bankruptcy if:
- You can't pay your bills as they come due
- You're facing foreclosure or repossession
- Creditors are suing you
- Your wages are being garnished
- You owe more than you can repay in 5 years
- You're using credit cards to pay basic living expenses
- You're considering withdrawing retirement funds to pay debts
Alternatives to Bankruptcy
Before filing, consider:
- Debt consolidation
- Debt settlement (negotiating reduced balances)
- Credit counseling
- Loan modifications (for mortgages)
- Direct negotiations with creditors
A bankruptcy attorney can help you evaluate all options and determine the best path forward.
How Much Does Bankruptcy Cost?
| Item | Cost |
|---|---|
| Court filing fees | $338 (Chapter 7), $313 (Chapter 13) |
| Credit counseling | $25-$50 |
| Attorney fees - Chapter 7 | $1,000-$3,000 |
| Attorney fees - Chapter 13 | $3,000-$6,000 |
| Total Chapter 7 | $1,500-$3,500 |
| Total Chapter 13 | $3,500-$6,500 |
Many bankruptcy attorneys offer payment plans or even $0 down options for Chapter 13 cases.
Will Bankruptcy Ruin My Credit?
Bankruptcy does affect your credit, but probably less than you think:
- Already low credit? Bankruptcy may improve your score within 12-24 months
- Stays on credit report: 7 years (Chapter 13) or 10 years (Chapter 7)
- Credit recovery: Most people can get credit cards within 1-2 years after filing
- Mortgage: Possible 2-4 years after discharge
The relief from constant debt stress and the ability to rebuild often outweigh the credit impact.
A free consultation with a bankruptcy attorney can help you understand whether bankruptcy is right for your situation.
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