📅 2026 Update: Key Changes in Bankruptcy Law

Since the original article was written, there have been important updates to U.S. bankruptcy law. These changes affect Chapter 13 debt limits, eligibility rules, and other crucial aspects of bankruptcy proceedings. The earlier article continues to provide foundational knowledge on the topic, which remains relevant.

📈 Chapter 13 Debt Limits

As of March 31, 2028, the debt limits for Chapter 13 bankruptcy are now $1,580,125 for secured debts and $526,700 for unsecured debts. These limits are subject to regular adjustments and are published in the Federal Register. This change is significant as it allows individuals with higher debts to seek relief under Chapter 13.

💰 Attorney Fees

The fees for bankruptcy attorneys are not fixed by the U.S. Trustee Program. They can vary based on the complexity of the case and the attorney’s experience.

It is advisable to consult with multiple attorneys to understand the typical rates in your area.

⚖️ 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. Completing the Chapter 7 Means Test Calculation form is a necessary step for eligibility.

📅 Credit Counseling Requirement

Before filing for bankruptcy, individuals must complete a credit counseling course from an approved agency. This course must be done within 180 days prior to filing. This requirement helps individuals understand their financial situation better.

🛑 Automatic Stay and Foreclosure

Filing for bankruptcy triggers an automatic stay that temporarily halts foreclosure proceedings. In Chapter 13, this protection can be extended, allowing individuals to cure delinquent mortgage payments over time. This provides essential relief for those facing foreclosure.

📌 Key Points to Remember

  • Chapter 13 debt limits are $1,580,125 for secured and $526,700 for unsecured debts.
  • Attorney fees vary based on case complexity and experience.
  • The means test is required to qualify for Chapter 7 bankruptcy.
  • Complete a credit counseling course within 180 days before filing.
  • Automatic stay stops foreclosure proceedings temporarily.

💡 Tips for Managing Bankruptcy

Review your situation carefully with an attorney to ensure you understand all your options.

📝 Understand the Means Test

The means test is crucial for Chapter 7 eligibility. It assesses your income and expenses to determine if you can repay debts. Familiarize yourself with the test to avoid complications.

📅 Keep Track of Deadlines

Be aware of deadlines, especially for credit counseling courses. Completing these within the specified timeframe is mandatory before filing for bankruptcy.

🛡️ Know Your Exemptions

Bankruptcy exemptions vary by state, allowing you to protect essential property. Understand which assets you can keep, such as your primary residence or retirement accounts.

🕒 Prepare for Processing Times

In Chapter 7 bankruptcy, expect a discharge of qualifying debts about four months after filing. For Chapter 13, repayment plans can last from three to five years. Planning for these timelines can help manage expectations.

🔄 Consider Converting Chapters

If you find that Chapter 13 is not working for you, consider converting your case to Chapter 7. This requires passing the means test and involves risk, but it may offer better relief.

🏆 Free Options Ranked by User Reviews (2026)

No national paid service met the review threshold for this area. Instead, this section highlights free government and nonprofit resources that can assist individuals with bankruptcy-related issues.

🥇 1. Credit Counseling Agencies

Approved credit counseling agencies provide free or low-cost services to help individuals understand their financial situation. They can guide you through the bankruptcy process and explore options available to you.

🥈 2. U.S. Trustee Program

The U.S. Trustee Program oversees the administration of bankruptcy cases. They provide resources and information to help individuals navigate bankruptcy.

Their website offers guidance on filing and managing bankruptcy.

🥉 3. Nonprofit Financial Education Services

Many nonprofit organizations offer financial education and counseling services. They can help individuals create budgets, manage debt, and understand bankruptcy options. These resources aim to empower individuals to make informed financial decisions.

4️⃣ Legal Aid Organizations

Legal aid organizations provide assistance to low-income individuals seeking help with bankruptcy. They may offer free consultations and help individuals understand their rights and options during the bankruptcy process.

5️⃣ State Bar Associations

Most state bar associations provide resources for individuals seeking legal help with bankruptcy. They often have directories of pro bono services and can guide individuals on finding legal assistance.

🔎 Things to Check Before Paying for Help

  • 🏛️ Ensure the service is nonprofit or government-funded.
  • 📜 Verify if they provide transparent information about fees.
  • ✅ Look for reviews or testimonials from past users.
  • 📅 Confirm that they comply with state regulations for bankruptcy assistance.
  • 📞 Check if they offer free consultations or assessments.

❓ Frequently Asked Questions

❓ What is the automatic stay in bankruptcy?

The automatic stay is a legal provision that halts foreclosure and collection activities when an individual files for bankruptcy. This gives the debtor temporary relief from creditors.

🕒 How long does a Chapter 13 repayment plan last?

A Chapter 13 repayment plan lasts between three to five years. The duration depends on the individual's income and the specific terms of the repayment plan.

💰 Can I keep my house during bankruptcy?

Yes, you can often keep your home during bankruptcy. Chapter 13 allows you to repay missed mortgage payments while keeping your property, provided you can adhere to the repayment plan.

❓ What debts can be discharged in Chapter 13?

In Chapter 13, debts like credit card balances and medical bills can be discharged upon completing the repayment plan. However, certain debts, such as most tax obligations and child support, are usually non-dischargeable.

🔄 What if I fail the means test for Chapter 7?

If you fail the means test for Chapter 7, you may need to consider filing under Chapter 13 instead. This provides a way to repay debts over time while keeping your assets.

📅 How often are Chapter 13 debt limits adjusted?

The debt limits for Chapter 13 are adjusted periodically and published in the Federal Register. It's important to stay updated on these limits if you are considering filing.

⚖️ Recent Court Cases Related to Bankruptcy

Several recent court rulings have addressed various aspects of bankruptcy law, including eligibility and dischargeable debts. These rulings impact how bankruptcy is processed and can affect individual cases significantly.

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

End of October 2026 Update





A Holder in Due Course is a commercial law which facilitates a transfer of debt or another financial obligation that must be paid to parties that are connected to the original transaction. The Due Course Doctrine formally insulates the final buyer of the debt obligation from challenges by either party of the original agreement or transaction. Typically, this clause is enacted and performed when there is a non-performance issue by one of the parties involved in the original contract. 

To clarify, if party X promised to pay a lump sum to party Y and Y then transferred that obligation of payment to Z, then Z would be classified as insulated or protected from any conflict which arises between the original members of the contractual agreement (parties X and Y.) As a result of the Due Course Statute, party X may then sue party Y for non-performance, but is still required to pay the original obligation to party Z.


What You Need to Know About Holder of Due Course