📅 2026 Update: Recent Changes in Bankruptcy Law

Since the original article was written, there have been significant changes in bankruptcy law and related protections for servicemembers. This update highlights key updates that impact Chapter 7, Chapter 11, and Chapter 13 bankruptcy processes, as well as enhancements to the Servicemembers Civil Relief Act (SCRA). The earlier article continues further down the page.

📈 Bankruptcy Filings Rise

In the 12 months ending March 31, 2026, total bankruptcy filings increased by 11.9%, reaching 591,850 cases. This rise reflects growing financial challenges for many individuals and businesses. Chapter 7 filings specifically saw a 15% increase, totaling 344,825 cases, which makes up 62% of all bankruptcy cases filed during this period.

💼 Chapter 11 Subchapter V Changes

In October 2026, Congress raised the debt ceiling for Subchapter V of Chapter 11 from approximately $3.4 million to $7.5 million. This change allows more small businesses to access streamlined bankruptcy processes. It aims to help them reorganize without the complexities of standard Chapter 11 filings.

🔄 Expanded SCRA Protections

The SCRA received a notable amendment in December 2024, which now includes law licenses under its professional license portability provisions. This allows servicemembers and their spouses to practice law using an out-of-state license in most cases, enhancing career mobility while serving.

💸 Current Bankruptcy Filing Fees

As of October 2026, the filing fees for bankruptcy cases are as follows:

  • Chapter 7: $338
  • Chapter 11: $1,738
  • Chapter 13: $313

These fees are subject to change, and it's important to consult official sources for the latest information.

📌 Key Takeaways

  • Bankruptcies increased to 591,850 cases in 2026.
  • Small businesses can now access Subchapter V up to $7.5 million in debt.
  • SCRA now includes law license portability.
  • Current Chapter 7, 11, and 13 filing fees are $338, $1,738, and $313 respectively.

💡 Tips for Navigating Bankruptcy Options

Reviewing your specific situation with an attorney is crucial for understanding your options.

📊 Understand the Means Test

For Chapter 7 bankruptcy, you must pass the means test. This test compares your income with the median income in your state. Knowing where you stand can help you prepare for your case.

⏳ Be Aware of Processing Times

Chapter 7 typically takes 3 to 6 months to complete. Chapter 11 can last from several months to years based on the case's complexity. Chapter 13 plans last 3 to 5 years, so planning accordingly is essential.

📝 Prepare Required Forms

Each bankruptcy chapter has specific forms that must be completed. For Chapter 7, complete Official Forms 101 and 106. Chapter 11 requires Forms 101, 201, and 3015, along with a reorganization plan.

Chapter 13 uses the same forms but requires a repayment plan.

📅 Know Your Deadlines

Timely submissions are crucial in bankruptcy. For Chapter 7, creditors must file claims within 70 days of the meeting of creditors. Chapter 11 debtors have 120 days to file a plan.

Chapter 13 plans must be submitted within 14 days of filing.

🤝 Explore Free Resources

Many states offer nonprofit legal aid organizations that provide free or low-cost assistance for individuals considering bankruptcy. Utilizing these resources can help ease the financial burden.

🏆 Free Options Ranked by User Reviews (2026)

No national paid service in this area met the review threshold, so this section lists free government and nonprofit resources available for those seeking help with bankruptcy.

🥇 1. U.S. Courts Website

The U.S. Courts website is a valuable resource for anyone considering bankruptcy. It provides comprehensive information about procedures and necessary forms.

This resource is suitable for individuals who want to navigate the bankruptcy process independently.

🥈 2. Legal Aid Organizations

Many states have nonprofit organizations that offer free or low-cost legal assistance to individuals considering bankruptcy. These organizations can help you understand your rights and options based on your specific situation.

🥉 3. U.S. Trustee Program

The U.S. Trustee Program offers resources and information for individuals contemplating bankruptcy. This program aims to ensure that the bankruptcy system is fair and efficient, providing guidance for those in need of assistance.

🔎 What to Check Before Paying for Help

  • 🏦 Verify credentials of any service.
  • 📄 Ensure transparency in fees and processes.
  • 📞 Check for reviews or testimonials.
  • 📚 Confirm they offer a free initial consultation.

❓ Frequently Asked Questions

❓ What is the Servicemembers Civil Relief Act?

The SCRA provides protections for active-duty military members, including limits on interest rates for pre-service debts and protections against default judgments. This law aims to ease financial burdens for servicemembers during their service.

🗓️ How long does bankruptcy last?

The duration of bankruptcy depends on the chapter filed. Chapter 7 typically lasts 3 to 6 months, Chapter 11 can take several months to years, and Chapter 13 plans usually last 3 to 5 years.

💼 What types of debts can be discharged in bankruptcy?

Common debts that can be discharged in bankruptcy include credit card debt, medical bills, and personal loans. However, some debts, like student loans and certain tax obligations, may not be dischargeable.

🚪 Can I keep my property if I file for bankruptcy?

Whether you can keep your property depends on the chapter you file and the exemptions available in your state. Chapter 7 may require liquidation of non-exempt assets, while Chapter 13 allows you to keep property by repaying debts over time.

📜 What happens to my credit after bankruptcy?

Bankruptcy can significantly impact your credit score. However, it may also provide a fresh start. With responsible financial management post-bankruptcy, you can begin to rebuild your credit over time.

⚖️ What should I do if I am facing foreclosure?

If you are facing foreclosure, filing for bankruptcy may temporarily halt the process. However, it's crucial to understand the implications and develop a plan for your mortgage going forward.

⚖️ Recent Court Rulings Related to Bankruptcy Cases

Recent court rulings have clarified various aspects of bankruptcy law, particularly concerning the SCRA and debt relief options for servicemembers. These rulings can affect how bankruptcy is processed and the protections available for those serving in the military.

For more recent rulings, check the latest updates in the news section.

End of October 2026 Update





The Servicemembers Civil Relief Act
(SCRA), signed into law by President George W. Bush
in December 2003 and an overhaul of the Soldiers’ and Sailors’ Civil
Relief Act (SSCRA) of 1940, continues its
legacy of protecting America's servicemen and women once they return from
a hostile environment. In particular, the SCRA (as opposed to the SSCRA) is
devoted to safeguarding members of the U.S. Armed Forces' houses while they are
away and after they come back.



 

Servicemembers Civil Relief Act


One such area for which the Act is pretty
explicit is that of leased and rented property. With homes leased prior to
service, servicemembers may be given either latitude to terminate their
agreements with landlords or to be spared eviction within reason.
Servicemembers may also be afforded clemency with regard to foreclosure of
their homes and mortgage payments, especially in the wake of some unforeseen
handicap. Under the SCRA, lenders and landlords who violate these precepts may
actually face jail time for their wrongdoings.



         



The Servicemembers Civil Relief Act
also touches upon the availability of insurance
to the servicemen and women after the fact. Title IV of the SCRA, for
instance, deals completely with the subject of life
insurance and ensures that insurers may not decrease the levels of coverage
relative to pre-service amounts, and that those who have served are entitled to
as much as $250,000 worth of coverage on a specific life insurance policy.
Health insurance benefits, too, are referred to by the Act and may be
reinstated in the event of termination as per the language of the law.



         



Servicemen and women may additionally
enjoy the relief offered to them by the Servicemembers Civil Relief Act with
respect to taxes. For taxes that went unpaid as a result of military service,
debtors may appeal for a stay on collection acts, including sale of property to
offset monies not yet received, as well as reinstatement of property rights in
the event of a wrongful sale. Plus, the delay of income tax
filings may be put off by up to 6 months, and thus, not indefinitely. In all
cases, there are limits to what the SCRA can do for American soldiers.