📅 2026 Update: Changes in U.S. Bankruptcy Laws

Since the original article was published, there have been important updates to U.S. bankruptcy laws. These changes impact the means test, exemptions, and the automatic stay provisions. The earlier article continues further down the page, providing foundational knowledge about bankruptcy filing steps and related topics.

📈 Means Test Adjustments

In 2025, the U.S. Department of Justice updated the median income figures for the Chapter 7 means test. This change affects who can qualify for Chapter 7 bankruptcy.

If your income is now below the new median, you may have better options for relief.

🏠 Exemption Updates

As of 2024, several states revised their bankruptcy exemptions. The homestead exemption limits were increased to account for inflation. This change could allow debtors to protect more of their home equity from creditors during bankruptcy.

⏳ Extended Automatic Stay

The Bankruptcy Abuse Prevention and Consumer Protection Act was amended in 2026. Now, the automatic stay period for certain debtors has been extended from 30 to 60 days. This gives debtors more time to get their finances in order without facing immediate collection actions.

💵 Current Fees and Costs

As of October 2026, the filing fee for Chapter 7 bankruptcy is $338, while for Chapter 13 it is $313. Additionally, debtors need to complete a credit counseling course, which generally costs between $20 and $50. These costs can add up, so it's essential to plan accordingly.

📌 Key Updates Summary

  • 📈 Means test figures updated in 2025.
  • 🏠 Homestead exemption limits raised in several states.
  • ⏳ Automatic stay period now extended to 60 days.
  • 💵 Chapter 7 filing fee is $338; Chapter 13 is $313.
  • 📚 Credit counseling courses cost between $20 and $50.

💡 Tips for Navigating Bankruptcy

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

📜 Understand the Means Test

Filing for Chapter 7 requires passing the means test. This test compares your income against the median income in your state. If your income is below the median, you may qualify for Chapter 7.

🏡 Explore Exemptions

Different states have various bankruptcy exemptions. Knowing your state's exemptions may help protect your assets, such as your home. Make sure to check if you can choose between federal and state exemptions.

📅 Complete Required Courses

Before filing, you must complete a credit counseling course. This course should be done within 180 days before filing. Additionally, a debtor education course is required before receiving a discharge.

⏳ Be Aware of Processing Times

Chapter 7 bankruptcy typically takes 3 to 6 months from filing to discharge. In contrast, Chapter 13 can last 3 to 5 years depending on your repayment plan. Understanding these timelines can help you plan better.

📈 Plan for Credit Impact

Filing for bankruptcy can stay on your credit report for up to 10 years. This may make it harder for you to obtain new credit afterward. However, rebuilding credit is possible through secured credit cards and timely payments.

💬 Utilize Free Resources

Consider using approved credit counseling agencies for free or low-cost services. They can provide valuable assistance during the bankruptcy process without adding financial strain.

🏆 Services Ranked by User Reviews (2026)

This section reviews credit repair and debt management services relevant to those considering bankruptcy. The services listed reflect Trustpilot data as of October 2026. Ratings can change over time, and star ratings are just one aspect, as unhappy customers may leave more reviews.

🥇 1. CreditRepair.com

CreditRepair.com has been rated 1.2. It is known for providing credit repair services and debt management. However, there have been numerous complaints about service quality and billing issues reported by customers.

🥈 2. Lexington Law

Lexington Law holds a Trustpilot score of 3.2. This service is recognized for credit repair and debt management. While many users appreciate the help they receive, there are mixed reviews regarding service quality and some complaints about billing practices.

🆓 Free Government and Nonprofit Help

Approved credit counseling agencies offer free or low-cost services to help with bankruptcy preparation. These agencies can assist in understanding your financial situation without the extra cost, making them a valuable option for low-income individuals.

🔎 Choosing the Right Service

  • 📊 Compare Trustpilot scores to evaluate customer satisfaction.
  • 📝 Check for any complaints related to service quality.
  • 💸 Look into costs associated with services.
  • 📅 Consider the timeliness of service delivery.
  • 📞 Assess the customer support options available.

❓ Frequently Asked Questions

❓ What is the means test for Chapter 7?

The means test is used to determine eligibility for Chapter 7 bankruptcy. It compares your income to the median income in your state. If your income is below the median, you may qualify for Chapter 7.

🔒 How long does the automatic stay last?

The automatic stay typically lasts for 60 days for certain debtors, following amendments made in 2026. This stay halts most collection actions against you once you file for bankruptcy.

📅 How long does Chapter 13 bankruptcy take?

Chapter 13 bankruptcy generally lasts between 3 to 5 years. The duration depends on your repayment plan, which outlines how you will pay back your debts.

🏠 What can I protect during bankruptcy?

You may be able to protect certain assets through state-specific bankruptcy exemptions. These exemptions can vary, so it's important to understand what is available in your state.

📈 Can I get credit after bankruptcy?

Yes, it is possible to obtain credit after bankruptcy, although it may be challenging. Secured credit cards or credit-builder loans can help rebuild your credit over time.

📚 What is a debtor education course?

A debtor education course is required before you can receive a discharge in bankruptcy. This course provides information on managing finances and avoiding future debt issues.

⚖️ Recent Cases Related to Bankruptcy

Recent court rulings have shown how bankruptcy laws are applied in various situations. These rulings can help clarify the rules around exemptions, the means test, and dischargeable debts.

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

End of October 2026 Update





What is Bankruptcy?

1. Bankruptcy is a Federal program that enables an individual or business entity facing insurmountable debts to restructure their debt obligations through liquidation or restructuring.

2. As a result of these characteristics, bankruptcy claims enable those in debt to seek alleviation through an alternative payment plan or the assets obtained from liquidation.

3. As set forth above, bankruptcy is a Federal program, meaning the laws and regulations which govern the claims are distributed and heard at the Federal level. In other words, individuals or business entities may not file for bankruptcy at the local level.

4. Individuals and business entities who file bankruptcy do so to free themselves from the constraints of creditors who perpetually seek repayment. Through the inclusion of a Government agency, those individuals and entities struggling with debts can reorganize their debt structure by supplying incremental payments to their creditors.

5. There are many different forms of bankruptcy filings, the most common being: Chapter 7 filings, Chapter 11 filings, and Chapter 13 filings.

6. Each form of bankruptcy claim seeks to alleviate the individual or entity’s debt through different means. A Chapter 7 filing will immediately resolve debts through liquidation—the individual or entity’s assets are sold and the proceeds from the liquidation are used to pay off the debts owed. A Chapter 11 filing is typically initiated by a business entity that is struggling with sales or earning a profit.

A Chapter 11 filing enables the business to maintain its operation (through the appointment of a trustee) while developing repayment plans that are aligned with the company’s expected profits. Lastly, a Chapter 13 Bankruptcy claim enables an individual or business entity to restructure their payment plan through the delivery of incremental payments. The incremental schedule is developed based on the debtor’s income, living expenses and the various amounts owed to the underlying creditors.

How to File for Bankruptcy



1. The first step to filing for bankruptcy requires that the individual debtor contact a reputable bankruptcy attorney. To find an experienced bankruptcy lawyer, you should contact your local or State Bar associations for referrals or ask friends if they know a suitable bankruptcy attorney.

2. Gather all your financial documents—including outstanding bills, paycheck stubs, bank statements, car loans, tax returns, and copies of your mortgage from the most recent six months.

3. After gathering these documents, you must deliver them to your attorney to initiate the paperwork. Bankruptcy paperwork (known as a Petition) requires that the debtor list every debt owed. Failure to include every debt will result in a termination of your bankruptcy filing. It is also a Federal crime to lie on your bankruptcy petition.

4. Discuss with your lawyer all secured and unsecured debts that exist on your petition. Secured debts refer to those assets (e.g., cars or mortgages) where creditors may hold a security interest in the property. If the debtor does not fulfill the obligations of their debt, the creditor may claim these assets. In contrast, unsecured debts refer to debts not secured by property, such as medical bills or credit cards.

5. After review of all the information, it must be determined which type of Bankruptcy claim should be filed. Once the claim has been determined, you must sign off that all of the financial information gathered is accurate. From here, your attorney will file your case with the Bankruptcy Court that oversees your particular district.

Filing for Bankruptcy: Step by Step