📅 2026 Update: Changes in Bankruptcy Laws and Fees

Since the original article was written, several important updates have occurred in U.S. bankruptcy law. These changes may affect how individuals and businesses navigate the bankruptcy process. The earlier article continues further down the page, providing foundational information on the topic.

🏦 Bankruptcy Threshold Changes

A significant change took place with the expiration of the Bankruptcy Threshold Adjustment and Technical Corrections Act (BTATC Act) on June 21, 2024. The debt limit for Subchapter V of Chapter 11 reverted from $7.5 million to $3,024,725. Additionally, Chapter 13 eligibility limits were reinstated.

Individuals now must have unsecured debts of $465,275 and secured debts of $1,395,875.

💰 Updated Bankruptcy Fees

The filing fees for bankruptcy have changed as of 2026. The fees are now:

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

These fees consist of filing and administrative costs, which are essential to consider when planning for bankruptcy.

👨‍⚖️ Changes in Trustee Compensation

The Bankruptcy Administration Improvement Act of 2025, enacted on February 6, 2026, increased trustee compensation in Chapter 7 cases. This act also extended quarterly fees for Chapter 11 cases for an additional five years, affecting how these cases are managed financially.

📅 Processing Times

The processing times for bankruptcy cases remain relatively stable but can vary.

  • Chapter 7 cases typically take 3 to 6 months from filing to discharge.
  • Chapter 13 may last 3 to 5 years based on the repayment plan's complexity.
  • Chapter 11 can take several months to years, depending on the case's intricacy.

📌 Key Updates Summary

  • - Debt limits for Subchapter V and Chapter 13 have reverted to lower amounts.
  • - Bankruptcy filing fees have been updated as of 2026.
  • - Trustee compensation has increased in Chapter 7 cases.
  • - Processing times remain generally consistent, but can vary widely.

💡 Tips for Navigating Bankruptcy

Before deciding on a bankruptcy option, it's crucial to review the details of your situation with your attorney.

📖 Understand Your Eligibility

Before filing, determine your eligibility for Chapter 7 or Chapter 13. The means test for Chapter 7 requires your income to be below the state median or to pass a disposable income test.

📅 Complete Required Courses

Remember that both credit counseling and debtor education courses are mandatory. These courses typically cost between $20 to $100 each and must be completed at specific times during the bankruptcy process.

📝 Prepare Necessary Documents

Gather all required documents before filing. This includes financial statements, tax returns, and a list of creditors. Proper documentation helps streamline the bankruptcy process.

🤝 Utilize Free Resources

Consider using free or low-cost resources. Organizations like legal aid programs and the U.S. Trustee Program offer assistance and information on bankruptcy procedures.

💼 Plan for Attorney Fees

Be prepared for attorney fees when filing. For Chapter 7, costs generally range from $1,500 to $2,500. For Chapter 13, fees can vary from $2,500 to $5,000 or more, depending on the case's complexity.

🏆 Bankruptcy Services Ranked by User Reviews (2026)

This section covers services related to bankruptcy and credit repair. These services can help individuals manage their debt and navigate bankruptcy more effectively. The order below follows Trustpilot data verified in October 2026.

Scores can change, and star ratings are just one signal; unhappy customers often post more reviews, leading to different averages.

🥇 1. Lexington Law

Lexington Law has been rated 3.2 on Trustpilot. This service is known for its credit repair and debt management offerings. Reviewers note mixed experiences, with some mentioning issues with customer service but acknowledging effective credit repair services.

🥈 2. CreditRepair.com

CreditRepair.com holds a low Trustpilot score of 1.2. It is known for credit repair services and debt management as well. However, many reviewers express dissatisfaction, citing numerous negative reviews and ongoing customer service complaints.

🆓 Free Legal Resources

Free legal aid organizations can provide assistance to those eligible. The U.S. Trustee Program also offers resources and guidance on bankruptcy processes, making it easier to navigate the system without incurring high costs.

🔎 Choosing the Right Service

  • 📝 Compare service fees and what they cover.
  • 📈 Look at customer reviews for insights into effectiveness.
  • ⏰ Check processing times for services.
  • 🤝 Assess the level of customer support provided.

❓ Frequently Asked Questions

🤔 What is the means test for Chapter 7?

The means test determines eligibility for Chapter 7. It requires that your income is below the state median or that you pass a disposable income test.

📅 How long does Chapter 13 bankruptcy last?

Chapter 13 bankruptcy typically lasts 3 to 5 years. The exact duration depends on the repayment plan agreed upon.

💵 Are there fees associated with credit counseling?

Yes, credit counseling courses usually cost between $20 to $100. Completing these courses is mandatory before filing for bankruptcy.

📜 What is the role of a trustee?

The trustee oversees the bankruptcy case, ensuring that creditors are paid according to the plan established in the bankruptcy filing. They also handle asset liquidation in Chapter 7 cases.

🏡 What is the homestead exemption cap?

The federal homestead exemption cap limits equity protection in homes purchased within 1,215 days before filing to $214,000. This impacts how much equity you can protect during bankruptcy.

🗓️ Can bankruptcy filings affect credit scores?

Yes, filing for bankruptcy can significantly impact your credit score. The effect can last for several years, but it may also provide relief from overwhelming debt.

⚖️ Recent Court Rulings in Bankruptcy Cases

There have been several recent court rulings that may impact bankruptcy proceedings. These rulings could influence how debtors and creditors interact during the bankruptcy process.

For more information, you can browse more rulings on the news page.

End of October 2026 Update





While a sale of business assets might
imply that a company is filing for Chapter 7 bankruptcy, it could also be a self-help strategy to avoid resorting to
bankruptcy. First
of all, as regards the sale of business assets away from bankruptcy, the
underlying laws surrounding such a maneuver are rather complex, especially in
terms of the policies of the Internal Revenue Service (IRS) enacted to address
these matters. Depending on the circumstances of the sale, the effectual nature
of the transaction will change accordingly.



 

Quick Guide to Sale of Assets


When stakes in partnerships are sold, for
instance, they are treated as capital assets, those not normally involved in
everyday business affairs. Any sale of business assets and the
financial state of affairs of the debtor — i.e. the net gain or loss —
following non-bankruptcy liquidation may be divided amongst capital and
non-capital holdings.



         



As for a non-business sale of assets,
this is significantly more common than its corporate counterpart. While this
term may be confusing to some, getting paid money in exchange for the transfer
of personal property is the very definition of a sale of assets. Accordingly,
something as familiar to members of a suburban neighborhood as a garage sale
may qualify under this category. However, only a select few possessions will
likely be enough to generate the debtor-seller the funds he or she needs to
overcome his or her debt. It is because of this, therefore, that something like
a car or house may be taken in a straight sale instead.



         



While not a sale of assets as some may
traditionally know it, cashing out on investment funds may be another possible
way of trying to overcome debt amid feelings of desperation. That said, this is
a risky way for debtors to proceed. For one, borrowing from Social Security or
some other public benefit fund may leave Americans with little to make use of
once they hit retirement. In idiomatic terms, they may be robbing Peter to pay
Paul. Furthermore, there are often stiff penalties associated with early
withdrawal of deposits, notably for 401(k) plans. Thus, while bankruptcy could
hurt the solicitor for up to 10 years after the fact, an imprudent sale of
assets may result in substantial financial handicaps after one stops
working.