📅 2026 Update: Recent Changes in Bankruptcy Law

Since the original article was published, there have been some important updates in U.S. bankruptcy law. These changes affect the eligibility and processes for Chapter 7 and Chapter 13 bankruptcies. You can read the earlier article further down the page for more in-depth information.

🏦 Chapter 13 Debt Limits

As of March 31, 2028, the debt limits for Chapter 13 bankruptcy have been updated. The new limits are $1,580,125 for secured debts and $526,700 for unsecured debts. These figures are reviewed periodically and are published in the Federal Register.

This means more individuals may qualify for Chapter 13 as the limits have increased since the original article.

📅 Credit Counseling Requirement

Individuals looking to file for bankruptcy must complete a credit counseling course from an approved agency. This must be done within 180 days before filing. This requirement has remained consistent, emphasizing the importance of financial education before taking such a significant step.

⏳ Processing Times

In Chapter 7 bankruptcy, debtors typically receive a discharge of qualifying debts about four months after filing. For Chapter 13 bankruptcy, individuals can repay their debts over a period of three to five years. These timelines are crucial for those considering bankruptcy, as they provide insight into how long the process may take.

📜 Means Test for Chapter 7

To qualify for Chapter 7 bankruptcy, individuals must pass the means test. This test evaluates income and expenses to determine disposable income. If a debtor's disposable income is high enough to repay creditors, they may be disqualified from Chapter 7 and may need to consider Chapter 13 instead.

📌 Key Points Summary

  • Chapter 13 debt limits are now $1,580,125 and $526,700, effective March 31, 2028.
  • A credit counseling course is required within 180 days before filing.
  • Chapter 7 discharges occur approximately four months after filing.
  • Individuals can repay debts in Chapter 13 over three to five years.
  • The means test is crucial for Chapter 7 eligibility.

💡 Tips for Navigating Bankruptcy

Review the details of your unique situation with an attorney.

📊 Understand Your Debt Limits

Be aware of the updated debt limits for Chapter 13 bankruptcy. Knowing that the limits are now $1,580,125 for secured debts and $526,700 for unsecured debts can help you determine if you qualify.

📝 Complete the Means Test

Filling out the means test is an essential step for Chapter 7 bankruptcy. This test helps assess your disposable income and whether you can qualify for this type of bankruptcy.

📅 Meet Credit Counseling Requirements

Don’t forget to complete your credit counseling course before filing. You must finish this course within 180 days before you submit your bankruptcy petition.

⏳ Plan for Processing Times

Keep in mind the processing times for each type of bankruptcy. Chapter 7 can take about four months, while Chapter 13 involves a repayment plan lasting three to five years. Planning accordingly can help manage expectations.

🔄 Consider Chapter Conversion

If you start with Chapter 13 but find it isn't working for your situation, you may consider converting to Chapter 7. Ensure you qualify for a Chapter 7 discharge and understand the risks involved.

🏆 Free Options Ranked by User Reviews (2026)

No national paid service in the bankruptcy area met the review threshold for user satisfaction. Instead, this section highlights free government and nonprofit resources that can help individuals navigate bankruptcy.

🥇 1. Approved Credit Counseling Agencies

Approved credit counseling agencies provide free or low-cost services. They help individuals understand their financial situation better and explore their bankruptcy options. Many agencies offer personalized guidance to make informed decisions.

🥈 2. U.S. Trustee Program

The U.S. Trustee Program oversees bankruptcy cases and ensures that individuals comply with the law. They provide resources and information about bankruptcy processes, which can help those considering filing.

🥉 3. Local Legal Aid Organizations

Local legal aid organizations may offer assistance to low-income individuals facing bankruptcy. They can provide legal guidance and support throughout the bankruptcy process, ensuring that individuals understand their rights and options.

4️⃣ Community Workshops

Many communities hold workshops that focus on financial management and bankruptcy. These workshops are often free and provide valuable information about budgeting, debt management, and bankruptcy.

5️⃣ State Bankruptcy Resources

Each state has its own bankruptcy resources that can help individuals understand the local laws and regulations. These resources may include informational websites or hotlines that offer guidance on the bankruptcy process.

🔎 What to Check Before Paying for Help

  • 📌 Verify the credentials of any organization.
  • 🔍 Check for reviews and user feedback.
  • 🏛️ Ensure they offer legitimate services.
  • 📅 Confirm they provide a clear outline of fees.
  • 📞 Ask about their experience with bankruptcy cases.

❓ Frequently Asked Questions

❓ What happens if I fail the means test for Chapter 7?

If you fail the means test, you may not qualify for Chapter 7 bankruptcy. In this case, you could consider filing for Chapter 13 instead, where you can create a repayment plan based on your income.

❓ Can I keep my house in Chapter 13 bankruptcy?

Yes, in Chapter 13 bankruptcy, you can keep your house. The automatic stay protects you from foreclosure, allowing you to catch up on missed payments over time.

❓ How long does a Chapter 13 repayment plan last?

A Chapter 13 repayment plan typically lasts between three to five years. The specific duration depends on your income and the details of your repayment plan.

❓ Are there certain debts I cannot discharge in bankruptcy?

Yes, certain debts are generally non-dischargeable, including most tax obligations and child support. It's important to know which debts can be eliminated through bankruptcy.

❓ What is the role of the automatic stay in bankruptcy?

The automatic stay is a court order that stops creditors from pursuing collections, including foreclosure. This stay goes into effect as soon as you file for bankruptcy.

❓ Can I convert my Chapter 13 bankruptcy to Chapter 7?

Yes, you can convert from Chapter 13 to Chapter 7 if you qualify for a Chapter 7 discharge. However, be aware of the potential loss of nonexempt property during the conversion.

⚖️ Recent Cases Related to Bankruptcy

Recent court rulings have clarified several aspects of bankruptcy law, particularly regarding eligibility and dischargeable debts. These rulings connect directly to the processes and requirements discussed in this article.

For more recent rulings, feel free to browse more rulings on the news page.

End of October 2026 Update





Debtor-creditor law, like bankruptcy law, is distinguished from criminal law as court proceedings whose adjudication are not dependent on the state prosecution of a criminal act. Rather, this branch of the law is invoked when the terms of a contractual agreement between a debtor and creditor/borrower and lender are not adhered to and attempts to settle disputes out of court have proven fruitless. More commonly, it is the debtor's failure to compensate the creditor for products delivered or services rendered.

Debtor-creditor law does not solely exist for the purposes of credit collection, however. While the results of debtor-creditor litigation along those lines are undoubtedly important, they are usually of a purely financial nature. Arguably more importantly, though, sometimes the debtor will be a victim aside from his or her delinquency in paying the creditor.

There are a myriad number of offenses for which a creditor may be charged for improper business practices. Oftentimes, debtor-creditor law as invoked by the debtor will be a response to the creditor failing to uphold the terms of service or being derelict in their duties as a professional/professional organization. Furthermore, it may also be implemented when a creditor uses deception, intimidation, defamation or some other way of improperly treating the customer in aims of getting back what is owed. 

Ultimate Debtor Creditor Law Guide



Governing Laws

Bankruptcy and bankruptcy law in the United States are just part of debtor-creditor law. Outside of bankruptcy law, however, there is not a wealth of legislation on the federal level that pertains to the debtor-creditor relationship. Moreover, it is not as if bankruptcy law can be simply applied to cases of credit and loan disputes so liberally.

Thus, while uniform laws on debt collection, credit reporting and loan contracts have been created, it is the individual states who must incorporate these provisions into their own codes. Moreover, these uniform law policies would realistically only be a supplement to state statutes and the decisions of local judges that form the basis of common law.

Said statutory and judicial elements truly make up the bedrock of debtor-creditor law. As discussed above, they cover the major intents of the law in protecting both the best interests of creditors (e.g. returning property rights to them, dispersing monies recovered from sale of a debtor's possessions upon default) and debtors (e.g. compensating them for services not received and/or damages done). Moreover, they outline ways by which a court judgment may serve to settle any disputes and to bring about a speedy administration of the judge's decision. 



Consumer Protection Laws



In the efforts to right the "wrongs" of debtors in failing to meet their financial obligations, creditors may err in their own right by being too aggressive with debtors. Though Federal legislation is not the primary mediator of debtor-creditor law as a whole, in terms of the consumer protection laws inherent in this subset of civil law, it is of decidedly large value.

Debt collection practices in the United States, for one, have had their fair share of abuses over time, and thus, must be continually guarded against. Consequently, the Fair Debt Collection Practices Act was enacted to address these types of situations. Other pieces of Federal legislation may not be as well known as the Fair Debt Collection Practices Act, but still have their function and are nevertheless sponsored by prominent consumer protection agencies like the FTC and FDIC.

The Truth in Lending Act (TILA), for one, narrows the more general focus of equity in debt collection specifically to fairness in offering loans to average people. TILA puts the onus on the lender to clearly communicate all terms of a loan contract to the borrower, including fees, the risks of taking out a loan, and the role that interest rate charges will play in the overall balance.



Liens

Indeed, sometimes debtors are the ones that need protection. Just as well, though, it may be creditors' rights to their property and money that are in need of protection. One branch of debtor-creditor law that is of noted significance to many debtors is lien law.

A lien is essentially insurance for the bank or other lender that they will be able to recoup an asset if a debtor doesn't make his or her payments. Often, this manifests itself in a lien secured against a house, which borrowers can willingly agree to in the form of the common mortgage. Just as virtually any loan or extension of credit may be a basis for debt, so too may any secured loan.

Legal Remedies for Creditors

Even in the absence of a lien, creditors may still seek relief from the court as per State statute and their very rights as creditors to their money/assets in the event debtors refuse to pay the agreed compensation. Granted, these remedies are largely similar to one another, but have their important differences just the same.

Attachment and replevin, for example, both involve the seizure of the debtor's goods as a means of covering his or her debt. However, replevin seems more interested in giving back stolen or illegally withheld possessions to creditors. Attachment is a more general process by which monies or assets are secured from the debtor with evidence they are owed a certain amount.

Other remedies, meanwhile, are slightly more specialized in how they operate. For instance, garnishment is usually manifested expressly as a deduction of up to a quarter of one's paycheck to satisfy a debt upon court order. Furthermore, an employer cannot stand in the way of collections through this avenue. As for receivership/custodianship, the hallmark of these solutions is that they make use of a third-party mediator/holder of properties, somewhat like a trustee.



Priority of Claims in Bankruptcy

When debtor-creditor law and bankruptcy do coincide, there must be standards by which the distribution of liquidated and reorganized assets to multiple creditors is governed. Indeed, as specified by Section 507 of Title 11 of the U.S. Code, a priority of claims system brings a sense of order to the collection process.

Highest up on the ladder in terms of priority are certain non-dischargeable debts. In all, though, a number of different kinds of debt have their place in the claims priority breakdown. In a manner comparable to out-of-bankruptcy garnishment orders, wages may also be used to defray balances on debt. Taxes also are by no means negligible, and things like income taxes and property taxes are thus covered by Section 507. Even restitution for vehicular manslaughter is considered a priority claim.