Free Debt Relief Resources: Expert Guides to Fix Your Finances

You're here because the debt isn't going away on its own. Maybe collectors won't stop calling. Maybe your wages are about to get garnished. Maybe you're wondering if bankruptcy will ruin you forever. (Spoiler: it won't.)

This library exists to give you clarity. Every guide below tackles one piece of the debt-relief puzzle with specifics you can act on today. No fluff. No pity. Just the information you need to stop reacting and start deciding.

Bankruptcy: What It Actually Does

Bankruptcy eliminates most unsecured debt in three to four months. That includes credit cards, medical bills, personal loans, and old utility bills. You keep your car if you're current on payments. You keep your home if your equity falls within state exemption limits. And you stop wage garnishment the day you file.

Two types matter for most people: Chapter 7 and Chapter 13. Chapter 7 wipes the slate clean if you pass a simple income test. Chapter 13 sets up a three-to-five-year repayment plan if you earn too much for Chapter 7 or need to catch up on a mortgage.

Our bankruptcy filing tool walks you through both options in plain English. It tells you which debts go away, which assets you keep, and what happens to your credit score. (The short version: it drops initially, then climbs faster than if you kept drowning in minimum payments.)

Chapter 7 Bankruptcy

This is the version 70% of filers choose. You submit paperwork. A trustee reviews your assets. Sixty days later, a judge discharges your debt. Total time: three to four months. Total cost if you file yourself: around $340 in court fees, depending on your district.

The income test compares your household earnings to your state's median. If you're below the median, you qualify automatically. If you're above it, a deeper calculation factors in your expenses. Either way, most people who think they earn too much actually don't.

You protect your property using state or federal exemptions. In most states, that means you can shield $25,000 to $50,000 in home equity, $4,000 to $6,000 in car equity, and unlimited retirement accounts. Exemptions exist for furniture, clothing, tools, and even pets. The trustee only takes what exceeds those limits, and for 96% of Chapter 7 cases, that's nothing.

Chapter 13 Bankruptcy

Chapter 13 works if you have steady income and need time to catch up on secured debt. You propose a repayment plan. The court approves it. You make monthly payments to a trustee, who distributes the money to creditors. After three to five years, any remaining unsecured debt gets discharged.

This route makes sense if you're behind on your mortgage or car loan and want to keep the asset. It also works if you earn too much for Chapter 7 or recently filed Chapter 7 and need relief again before the eight-year waiting period ends.

The downside: you commit to a strict budget for years. The upside: you save your house or car, and you still eliminate most credit card and medical debt at the end.

Wage Garnishment: How to Stop It Today

Creditors can seize up to 25% of your take-home pay once they win a lawsuit and get a garnishment order. That's not a threat. That's a court-authorized deduction that hits every paycheck until the debt is paid in full.

Filing bankruptcy triggers an automatic stay. The garnishment stops the same day. Your employer gets a notice. The withheld money goes back into your paycheck. If you're weeks away from filing, you can sometimes negotiate a temporary hold by showing proof that you've started the bankruptcy process.

State law sets lower garnishment limits in some cases. For example, head-of-household filers in Florida can't be garnished at all if they meet certain criteria. But most states follow the federal 25% cap, and that cap applies even if multiple creditors want a piece.

The key: don't wait for the garnishment to start. Once it begins, you're losing a quarter of your income while trying to scrape together filing fees. Start here to see if bankruptcy makes sense for your situation.

Debt Collectors: What They Can and Can't Do

Debt collectors violate the Fair Debt Collection Practices Act every day. They call before 8 a.m. Or after 9 p.m. They threaten arrest. They contact your employer. They refuse to validate the debt when you ask. All of that is illegal, and you can sue for it.

The law gives you two weapons. First, a written request for debt validation forces the collector to prove they own the debt and that the amount is correct. They must stop calling until they send that proof. Most can't, because they bought a spreadsheet from the original creditor and never received the actual paperwork.

Second, a cease-and-desist letter ends all contact except to notify you of specific actions like filing a lawsuit. Send it via certified mail. Keep the receipt. If they call again, you have evidence for a lawsuit that can net you $1,000 plus attorney fees.

Collections also stop when you file bankruptcy. The automatic stay blocks all contact. Collectors who ignore it face contempt charges and fines payable to you. That includes calls, letters, lawsuits, and garnishments.

Statute of Limitations on Debt

Old debt loses its teeth. Every state sets a time limit for creditors to sue you, typically three to six years from your last payment. Once that window closes, the debt is time-barred. Collectors can still ask for payment, but they can't take you to court.

Restarting the clock is easy to do by accident. Making a partial payment, acknowledging the debt in writing, or agreeing to a payment plan resets the timer. If a collector contacts you about a debt older than four years, say nothing. Ask for validation. Check your state's statute of limitations before engaging.

Time-barred debt still appears on credit reports for seven years from the date of first delinquency. Paying it won't remove the negative mark. It just confirms the debt is yours, which makes it easier for collectors to pursue you in states where the statute hasn't fully expired.

Student Loans: Your Real Options

Student loans don't vanish in bankruptcy unless you prove undue hardship, which requires a separate lawsuit and a very high bar. But bankruptcy still helps by eliminating other debt, freeing up money for loan payments.

Income-driven repayment plans tie federal loan payments to your earnings. If you make 200% of the poverty line or less, your payment could drop to zero. After 20 or 25 years, depending on the plan, any remaining balance is forgiven. (That forgiveness becomes taxable income, but that's a problem for future you with a stable income.)

Private loans offer less flexibility. Some lenders provide hardship forbearance or modified payment plans, but you have to ask. Defaulting on private loans leads to lawsuits and wage garnishment. Co-signers get stuck with the bill if you can't pay.

One path worth exploring: the undue hardship standard in bankruptcy varies by court. Some judges apply a strict three-part test. Others use a more lenient totality-of-circumstances approach. If your loans exceed your lifetime earning potential and you've made good-faith efforts to repay, you might have a case.

Property and Exemptions: What You Keep in Bankruptcy

Exemptions exist to prevent bankruptcy from leaving you homeless and jobless. Every state provides a list of protected assets. Federal exemptions offer an alternative in some states. You choose whichever set protects more of your stuff.

Homestead exemptions shield equity in your primary residence. The amount ranges from $6,000 in New Jersey to unlimited in Florida and Texas. If your equity falls below the limit, the trustee can't touch your house. If it exceeds the limit, you can sometimes negotiate by paying the excess to the trustee in exchange for keeping the property.

Vehicle exemptions typically cover $4,000 to $6,000 in equity. If your car is worth $8,000 and you owe $5,000, your equity is $3,000. That fits under most exemptions. If your car is paid off and worth $10,000, you might lose it in Chapter 7 unless you can buy back the non-exempt equity.

Retirement accounts like 401(k)s and IRAs are fully exempt under federal law. Creditors can't touch them. Bankruptcy trustees can't touch them. This matters if you're tempted to drain your retirement to pay debts. Don't. Let bankruptcy eliminate the debt and preserve your retirement.

Buying Property After Bankruptcy

Bankruptcy stays on your credit report for seven years in Chapter 13 or ten years in Chapter 7. But you can buy a house in two to four years if you rebuild credit strategically.

FHA loans require a two-year waiting period after Chapter 7 discharge. Conventional loans require four years. VA loans also require two years. Those timelines shrink if you can document extenuating circumstances like medical debt or job loss.

Start by getting a secured credit card within six months of discharge. Use it for small purchases. Pay the balance in full every month. After a year, apply for a second card. By year two, your score should be high enough for an auto loan, which further boosts your credit mix.

Taxes and Bankruptcy: When the IRS Debt Goes Away

Income tax debt can be discharged in bankruptcy if it meets four conditions. The tax year must be at least three years old. You must have filed a return for that year at least two years before filing bankruptcy. The IRS must have assessed the tax at least 240 days before you file. And you can't have committed fraud or willful evasion.

Those rules eliminate more tax debt than most people expect. If you owe $20,000 from your 2019 and 2020 returns, filed those returns on time, and haven't hidden income, Chapter 7 wipes out that debt. Penalties and interest go away too.

Tax liens survive bankruptcy. If the IRS placed a lien on your property before you filed, the lien remains even after discharge. The IRS can't pursue you personally, but they can still claim the asset if you sell it. Negotiating lien release or subordination sometimes works, especially if the asset's value barely covers the lien.

Payroll taxes and trust fund taxes never discharge. If you're a business owner who withheld employee taxes but didn't remit them to the IRS, that debt follows you forever. Chapter 13 can structure a repayment plan, but you'll pay every cent.

Going to Court: What Actually Happens

The 341 meeting of creditors is the only court appearance required in most Chapter 7 cases. It's not in a courtroom. It's in a conference room or over Zoom. A trustee asks basic questions about your paperwork. You answer under oath. The whole thing takes ten minutes.

Creditors can attend and ask questions, but they almost never do. The trustee wants to verify your income, confirm your assets, and make sure you didn't hide anything. If your paperwork is accurate and complete, the meeting ends without drama.

Chapter 13 requires a confirmation hearing where a judge approves your repayment plan. You attend with your attorney, if you have one. The trustee and creditors can object if they think the plan pays them too little. Most plans get approved with minor tweaks.

Adversary proceedings are mini-lawsuits within your bankruptcy case. They happen if the trustee suspects fraud or if you're trying to discharge student loans. These require formal litigation, including discovery and trial. They're rare, but they turn a simple bankruptcy into a months-long ordeal.

Divorce and Bankruptcy: Which Comes First

Timing matters. Filing bankruptcy before divorce eliminates joint debt, simplifying the divorce. Filing after divorce means coordinating two cases and possibly dealing with discharged debt that your ex was supposed to pay.

Bankruptcy discharges your personal obligation on joint debt, but it doesn't remove your ex's name from the account. If your divorce decree says your ex pays the credit card and they don't, the creditor can still sue you. You can sue your ex for violating the decree, but the creditor doesn't care about your divorce agreement.

Domestic support obligations like child support and alimony never discharge. They also get priority in Chapter 13 repayment plans, meaning they're paid before credit cards and medical bills. If you owe back support, expect the trustee to prioritize it.

Property division complicates things. If your divorce settlement gives your ex the house but you're both on the mortgage, you're still liable until the mortgage is refinanced in their name alone. Bankruptcy can discharge your obligation, but it won't remove the lien or transfer the property.

Your Next Move

Pick the guide that matches your immediate problem. If collectors are calling, start with consumer rights. If garnishment is pending, read that section and check if you qualify for bankruptcy. If you're just researching, begin with Chapter 7 basics.

Most people wait too long. They drain savings. They borrow from family. They let the debt grow while they try to fix it with minimum payments. By the time they file bankruptcy, they've spent thousands on a problem that bankruptcy would have solved for $340.

Use our free screening tool to see what bankruptcy would eliminate, what you'd keep, and whether you qualify. The answers take five minutes. The relief starts the day you file.