📅 2026 Update: Changes in Bankruptcy Law and Credit Card Use

Since the original article was written, there have been notable updates in U.S. bankruptcy law that impact both consumers and credit card users. These changes address debt limits, filing fees, and other important aspects of bankruptcy. The earlier article continues further down the page, providing foundational information on credit card use.

💰 Chapter 13 Debt Limits

As of April 1, 2022, the debt limits for Chapter 13 bankruptcy increased significantly. The new limit is $2,750,000 for combined secured and unsecured debts. This is a rise from the previous limit of $1,257,850.

This adjustment is based on the Consumer Price Index and will be reviewed every three years.

📜 Current Filing Fees

Filing fees have changed and are important to note. Here are the current fees for different types of bankruptcy:

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

These fees are subject to change and can vary by district. Knowing these costs can help in planning a bankruptcy filing.

⏳ Processing Times

The time it takes to process a bankruptcy case also varies.

  • Chapter 7 cases typically wrap up in about 3 to 6 months.
  • Chapter 13 repayment plans last 3 to 5 years.
  • Chapter 11 cases can take several months, or even years, to complete.

Understanding these timelines helps in managing expectations during the bankruptcy process.

🚨 Automatic Stay and Discharge of Debts

Filing for bankruptcy triggers an automatic stay that stops most collection actions against the debtor. This can provide immediate relief. However, not all debts are dischargeable.

Exceptions include certain taxes, child support, and alimony. Knowing what debts can be discharged is essential for anyone considering bankruptcy.

📌 Key Points Summed Up

  • Chapter 13 debt limits increased to $2,750,000.
  • Filing fees vary, with Chapter 7 costing $338.
  • Processing times differ by chapter; Chapter 7 usually takes 3 to 6 months.
  • An automatic stay halts most collections when filing for bankruptcy.
  • Not all debts are dischargeable; exceptions exist.

💡 Tips for Managing Credit Cards After Bankruptcy

Reviewing your financial situation with an attorney is essential for the best outcomes.

🏦 Understand Your Debt Limits

After a bankruptcy, it's important to know your new debt limits. For Chapter 13, the limit is currently $2,750,000. This can help you decide how to manage your credit card debt moving forward.

📝 Complete Required Counseling

Before filing for bankruptcy, you must receive credit counseling from an approved agency. This must be done within 180 days prior to filing. Completing this step is essential for qualifying for bankruptcy.

⏰ Know Your Processing Times

Be aware of how long each bankruptcy chapter takes. Chapter 7 can take about 3 to 6 months, while Chapter 13 involves a repayment plan lasting 3 to 5 years. This knowledge can help you plan your finances better.

📊 Keep Track of Filing Fees

Filing fees can add up quickly. For example, Chapter 7 costs $338, while Chapter 13 costs $313. Budgeting for these fees early can ease the financial burden.

🛡️ Monitor Your Credit After Discharge

Rebuilding your credit after bankruptcy is possible but may take years. It’s important to monitor your credit report regularly to track improvements and identify issues that may arise.

💬 Seek Free Legal Aid if Needed

If you're unsure about the bankruptcy process, several nonprofits offer free or low-cost legal assistance. These organizations can provide valuable help in navigating your situation.

🏆 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 for bankruptcy assistance.

🥇 1. Credit Counseling Agencies

These agencies provide essential credit counseling services to individuals considering bankruptcy. They help assess financial situations and offer budgeting advice. Many agencies are approved to meet the 180-day requirement before filing.

🥈 2. Legal Aid Organizations

Legal aid organizations offer free or low-cost legal assistance to individuals facing bankruptcy. They help with paperwork, navigating the legal system, and understanding rights and responsibilities. These resources are vital for those who cannot afford private legal counsel.

🥉 3. U.S. Courts Website

The U.S. Courts website provides official bankruptcy forms and guidelines for filing. It offers detailed instructions on the steps to take, including how to file a petition and what documents are required.

This resource is useful for anyone considering bankruptcy.

4️⃣ Local Bankruptcy Clinics

Many local legal clinics offer workshops and resources related to bankruptcy. These clinics can help individuals understand the filing process and provide strategies for managing debt effectively. They are often staffed by volunteers with legal expertise.

5️⃣ State Bar Association Resources

State bar associations often have resources for individuals seeking legal help with bankruptcy. They can connect people with nonprofit organizations and legal aid services. This helps ensure that individuals receive the assistance they need.

🔎 Things to Check Before Paying for Help

  • 📑 Confirm credentials of any service.
  • 💰 Review fees and avoid hidden costs.
  • 🔍 Check reviews and testimonials from previous clients.
  • 🕒 Ensure the service meets any timeframes for filing.
  • 📞 Verify if the service offers follow-up support.

❓ Frequently Asked Questions

❔ What is the means test in bankruptcy?

The means test determines eligibility for Chapter 7 bankruptcy. It compares the debtor's income to the median income in their state.

❓ Can I keep my credit cards after filing for bankruptcy?

You might be able to keep some credit cards, but most will be closed by the lender. It's important to check the terms of your credit cards.

❓ How does the automatic stay work?

The automatic stay halts most collection actions against the debtor once they file for bankruptcy. This includes calls and lawsuits from creditors.

❓ What debts are not dischargeable?

Certain debts, such as child support, alimony, and some taxes, are not dischargeable in bankruptcy. Understanding what can be discharged is crucial.

❓ How long does bankruptcy stay on my credit report?

Bankruptcy can stay on your credit report for 7 to 10 years depending on the chapter filed. This can affect your ability to obtain new credit.

❓ Can I file for bankruptcy more than once?

Yes, it is possible to file for bankruptcy multiple times. However, there are specific time limits and conditions that must be met for subsequent filings.

⚖️ Recent Court Rulings on Bankruptcy Cases

Recent court rulings have influenced how bankruptcy cases are handled, impacting the procedures and rights of debtors.

For more recent rulings, check out more rulings on the news page.

End of October 2026 Update





When used responsibly, of course, credit cards are a positive symbol of one's commitment to good credit. In fact, following a declaration of bankruptcy, credit cards can be a way of building up one's credit fairly quickly through evidence of timely, consistent monthly payments, though some cards will, imaginably, be hard to get immediately following the act of filing.

However, though credit cards may be a fast way to build up a good credit track record, just the same, they may send a person into debt even faster, and may be one of the reasons someone files for bankruptcy in the first place. In short, credit card debt and bankruptcy, in the hands of the unsafe spender, are tailor-made for one another. 

Numerous organizations, knowing this phenomenon full well, will offer programs about how to avoid "credit card bankruptcy," and in some cases, will even extend the offer of a new card to the consumer. Keeping with the theme, though, the following are some notes on the relationship between credit card debt and bankruptcy, and how the two may be avoided: 

Quick Tips on Using Credit Cards

In terms of general tips in the use of credit cards, the most common piece of advice in avoiding credit card bankruptcy is to keep a mind on one's charges every month, and for every credit card used at that. Unlike a debit card, with which a person deducts money from a bank account with a fixed total amount in the reserve, a credit card allows people to charge essentially as much as they want until they hit their credit limit on that card, also known as "maxing out". 

Especially when multiple credit cards are used in conjunction this way, credit card debt and bankruptcy are almost sure to follow. Concordantly, individuals who have troubles with credit card bankruptcy because of the above reasons are advised to limit their use of credit cards. In some desperate cases, holders may be urged to do away with credit cards altogether, as they are too much of a temptation otherwise. 

For others who are committed to having credit cards and being careful with them, it is suggested they carry, at most, three cards, and in the early going, perhaps just one in the form of an easy-to-secure card like a department store credit card.

As it stands to reason, not only must a person create and maintain a budget for their spending as well as to simplify the state of their credit ownership, but they must be cautious enough to pay on time. One of the direct influences on credit card debt and bankruptcy, and one that likewise may go unconsidered by inexperienced credit card holders is the idea that creditors will exact "late fees" in the event monthly payments are not met. 

To be sure, specific late fees differ from lender to lender, but an added charge of $30 or more to the consumer is not unheard of. A one-time dip into the realm of delinquent payments is unlikely to land a person in credit card bankruptcy, but if these sums consistently add up, debts easily stand to get out of control.

Another unfortunate aspect of credit cards, from the consumer's standpoint, and another reason using them is a slippery slope to credit card bankruptcy is that interest rates tend to be rather high on credit cards as opposed to other forms of credit. 

Often, as a risk of securing credit cards that are not difficult to obtain, high annual percentage rates (APRs) will be placed on one's credit balance, and when monthly payments are missed multiple times or even just once, these rates can skyrocket. A key measure in preventing credit card debt and bankruptcy, therefore, is to educate oneself about the nature of interest as well as to scrutinize a lender's terms when filling out a credit card application.