Personal Bankruptcy:
Frequently Asked Questions

Commonly Asked Questions About Personal Bankruptcy

You have questions about personal bankruptcy, and we have answers.

For many years, We The People has been helping individuals and families file for bankruptcy without the legal representation of an attorney. These are some of the most common questions that our clients ask us about personal bankruptcy.

We hope that you find these answers helpful, but please don’t hesitate to call your local We The People office with additional questions or to set up an appointment.

What Are the Different Types of Bankruptcies?

The U.S. Bankruptcy Code describes five types of bankruptcies:

  • Chapter 7 Bankruptcy is the most common type filed among individuals, and it releases a debtor from personal liability for dischargeable debts to make a clean start.
  • Chapter 13 Bankruptcy is best for individuals who have a steady income and who will be able to pay back debts in the future, thereby retaining personal assets.
  • Chapter 11 Bankruptcy is a reorganization for commercial businesses, and
  • Chapter 12 Bankruptcy is for family farmers who need debt relief now but who can pay the debt back in three to five years.
  • Finally, Chapter 9 Bankruptcy is for official municipalities in debt, such as cities, counties, and school districts.

Should I File Bankruptcy?

Bankruptcy is a very serious and a very personal decision, and it’s never one to be taken lightly. Filing bankruptcy can have very negative impacts on your ability to apply for credit and borrow money, so it is best to pursue filing bankruptcy only if you truly cannot pay your debts.

Before choosing bankruptcy as your best option, try to negotiate with your creditors to settle your debt in a compromised way. Credit counseling may also be able to help you get lower monthly payments and lower interest rates, thereby making it more possible for you to pay off your debt.

When Should I File Bankruptcy?

There are certain situations in which it makes sense to file for bankruptcy as your best option. After exploring the alternatives mentioned above and also perhaps credit card consolidation, loan refinancing or modification, and financial coaching, it may be time to consider filing for bankruptcy. If you are unemployed and have no income or savings, it may be time to file for bankruptcy after exhausting all other alternatives. It also may be time for filing bankruptcy if you have delinquent taxes, pending lawsuits for unpaid bills, garnished wages, or if your home is likely to be foreclosed on.

How Do You File Bankruptcy?

If you do not hire a lawyer to handle your bankruptcy case, you may need to do a bit of research or receive advice about which chapter to file under, whether your debts can be discharged, the tax consequences of filing, and how to access the correct forms. However, bankruptcy forms are free and available to the public, and this is where We The People can step in to assist you in preparing and filing your bankruptcy petition. After completing the forms, you can deliver them to the bankruptcy court, which will assign you a bankruptcy trustee. Then a bankruptcy judge will rule on your eligibility and discharges, although debtors are rarely required to appear in court.

How Much Does It Cost to File Bankruptcy?

The average bankruptcy filing costs between $1,500 and $4,000, including attorney fees and court filing fees. If you represent yourself pro se in your bankruptcy matter, you can significantly reduce these costs. We the People offers a cost-effective alternative to high fees that prohibit some people from pursuing bankruptcy when it is their best option.

According to, America’s debt help organization, the total filing fee for Chapter 7 bankruptcy is $335. An administrative fee of $75, trustee surcharge fee of $15, and re-opening of a Chapter 7 filing fee of $260 may apply as well. While attorneys’ fees vary, the average attorney’s fee for a Chapter 7 bankruptcy is $1,072.

What Does Bankruptcy Mean?

Bankruptcy is a court procedure that is part of a federal law to enable individuals and businesses to relieve themselves of debt and ensure that creditors get paid what they are due.

Liquidations are types of bankruptcies that involve having your property or other assets seized in exchange for debt relief.

Reorganizations are types of bankruptcies that apply to businesses rather than individuals who have debt. You must prove that you are eligible for bankruptcy, which means showing that you don’t make enough income to pay your bills and other requirements.

While credit card debt and unsecured loans are wiped out with Chapter 7 bankruptcy, back taxes and child support payments are not.

What Are the Repercussions of Filing Bankruptcy?

The repercussions of filing bankruptcy are serious because a Chapter 7 bankruptcy typically stays on your credit report for 10 years, and a Chapter 13 bankruptcy sticks around for seven years. You may see your credit score drop. However, if your credit score was already low before filing bankruptcy, you may not see much of a shift afterwards. If you have a lien on your home, this will not be discharged after filing bankruptcy, which could lead your lender to foreclose if you default on the loan.

Do I Qualify for Bankruptcy?

The first step in pursuing personal bankruptcy is to determine your eligibility. This is why We The People provides clients with a free eligibility questionnaire, known as the “means test,” at locations that handle bankruptcy matters. To pass this test and continue the process of filing bankruptcy, it is necessary to show that you have very little or no disposable income at all. If your income is higher, you can still qualify for Chapter 7 personal bankruptcy by providing information about how your expenses outweigh your income. If the balance is skewed towards more expenses than income, then you may be able to file for personal bankruptcy after all.

Can I Apply for Credit Cards After Bankruptcy?

The simple answer to this question is yes, you can apply for a credit card after filing bankruptcy. However, you will likely have to pay higher interest rates, and you may not be eligible to receive the credit cards that you want. If credit card debt was a factor in making you file for personal bankruptcy in the first place, then you’ll definitely want to use caution when applying for new cards. High interest rates can lead you back into debt and negate the financial benefits of filing bankruptcy. It’s best to charge only small amounts on a new credit card and pay your full balance each month.

Can I Apply for a Mortgage After Bankruptcy?

Buying a new house is also more challenging after filing bankruptcy, regardless of whether you file Chapter 7 or Chapter 13. After your bankruptcy is discharged, you should access your updated credit report and check for errors. You can start building your credit back up with credit cards and installment loans by making monthly payments in full and on time.

It is typically recommended to wait at least two years after filing bankruptcy to apply for a mortgage to get better interest rates and save money in the long-run. You should also be prepared to explain the circumstances of your bankruptcy to a lender when you eventually do apply for a new mortgage.

Get started on filing for bankruptcy today. Find a local We The People store near you or make an appointment for your free consultation to learn more about bankruptcy paperwork today.

We The People is a debt relief agency.
We help people file for relief under the Bankruptcy Code.

Some services may not be available in all locations.

Contact your local store for availability.

“You Make the Decisions… We Do the Paperwork”