What Chapter 7 and Chapter 13 would change

Consumer Bankruptcy Research Report

Assignment: SettleADebt.com research assignment R038, assigned area A038 — Consumer bankruptcy

Scope: Chapters 7 and 13; eligibility and means testing; exemptions; automatic stay; trustees; plans; secured and priority claims; discharge exceptions; costs; dismissal and repeat filings; tax, credit, collateral, settlement suitability, collection-stage effects, tribal issues, protected income, assistance, and creditor-contract boundaries.

Baseline and actual check date: October 22, 2026, America/Los_Angeles. No later check date applies.

Research character: reusable editorial/legal research, not individualized legal, tax, credit, or financial advice. A consumer’s result can change materially with domicile, district and circuit precedent, property values, title, lien perfection, prior cases, debt purpose, tax history, marital/community-property law, and the exact creditor contract.

Scope, status, and controlling conclusions

Bankruptcy is federal law administered in federal bankruptcy courts, but a consumer case is not purely federal in operation. The Bankruptcy Code determines who may file, what enters the bankruptcy estate, the automatic stay, claim treatment, confirmation and discharge; state law can determine property rights, lien validity, exemption availability, foreclosure completion, community-property consequences and many underlying liabilities; tribal creditors are affected by federal bankruptcy law; and federal agency programs may add policy overlays, such as the Department of Justice process for federal student-loan undue-hardship litigation. 1

The core distinction is structural. Chapter 7 creates an estate and generally calls for liquidation of nonexempt estate property by a Chapter 7 trustee, with an individual debtor potentially receiving a discharge without a multiyear repayment plan. Chapter 13 is available to qualifying individuals with regular income and generally permits them to retain property while performing a court-confirmed repayment plan, normally over three to five years. 2

R038-C001 — Current legal baseline. On the October 22, 2026 check date, the Federal Rules of Bankruptcy Procedure page states that the Rules were last amended in 2025. The Judicial Conference's April 2025 inflation adjustments remain the governing Code dollar amounts for cases filed from April 1, 2025 until the next three-year adjustment, absent intervening legislation. A separate rules package is scheduled for December 1, 2026 and therefore is future-effective, not current law on this report's check date. 3

R038-C002 — No single “bankruptcy eligibility” test exists. Chapter choice requires separate analysis of debtor status, prior filings, credit counseling, Chapter 13 debt limits, Chapter 7's consumer-debt abuse provisions, current monthly income and means-test deductions, ability to fund a Chapter 13 plan, property exposure, secured-debt treatment and dischargeability. A person can, for example, be above the applicable state median yet still have no statutory presumption of Chapter 7 abuse after allowed deductions; conversely, passing the arithmetic means test does not eliminate every possible §707(b)(3) abuse challenge. 4

R038-C003 — Current Chapter 13 debt limits. For cases commenced on and after April 1, 2025, an individual with regular income must have noncontingent, liquidated unsecured debts of less than $526,700 and noncontingent, liquidated secured debts of less than $1,580,125. The temporary combined debt-limit regime associated with 2022 legislation is no longer the current §109(e) rule. The U.S. Courts' current Chapter 13 page reflects these separate limits. 3

Direct authority: 11 U.S.C. §109, subsection (e); 90 Fed. Reg. 8941, 8942, table for §109(e).

R038-C004 — The applicable exemption system is often the largest geographic variable. Bankruptcy Code §522 first supplies a federal exemption framework, but a state may opt out of the §522(d) bankruptcy exemptions. Even before choosing dollar amounts, a moved debtor must apply §522(b)(3)(A)'s domicile lookback. A debtor domiciled in one state on filing day therefore may have to use another state's law, and an opt-out statute may have residency or extraterritorial limits. 5

R038-C005 — Filing ordinarily produces immediate collection protection, but “automatic stay” is not synonymous with “everything stops.” Sections 362(a) and (b) contain the operative prohibitions and numerous exceptions; creditors can request stay relief; serial filings can limit the stay; Chapter 13 has a distinct consumer co-debtor stay; and the Supreme Court held in City of Chicago v. Fulton that mere retention of estate property seized before filing does not itself violate §362(a)(3). 6

R038-C006 — Bankruptcy discharge is principally a release from personal liability, not a universal lien eraser. Valid liens often survive a personal discharge unless avoided, satisfied, stripped or otherwise modified through an authorized Code mechanism. This distinction is central for mortgages, auto loans, judgment liens, tax liens and any ostensibly “unsecured” account that actually has contractual collateral. Sections 522(f), 524, 722, 1322 and 1325 must therefore be separated from the discharge analysis. 5

R038-C007 — Bankruptcy has no universal debt-settlement percentage, credit-score drop, credit-recovery period or tax promise. The Code can create a stay and ultimately a discharge without every creditor agreeing, whereas an informal settlement is normally creditor-by-creditor and has no bankruptcy automatic stay. Federal tax law separately excludes qualifying debt discharged in a Title 11 case from gross income under IRC §108(a)(1)(A), subject to tax-attribute consequences; informal cancellation can require a different §108 exclusion or produce taxable cancellation-of-debt income. Credit reporting law permits bankruptcy information for up to ten years, but neither statute nor CFPB guidance provides a fixed score decrease or recovery date. 7

R038-C008 — Important source-quality warning. Some current U.S. Courts “Bankruptcy Basics” pages contain fee/deadline language that is not aligned with more current fee schedules or Rules. For example, the Chapter 7 and Chapter 13 Basics pages still refer to a $75 administrative fee, while current court fee materials reflect a $78 administrative fee and current totals of $338 for Chapter 7 and $313 for Chapter 13. The Chapter 13 Basics page also retains an older proof-of-claim formulation. For publication, the current rule text and fee schedule control over a stale explanatory page. 6

Federal eligibility, means testing, exemptions, stay, and trustees

Consumer versus commercial purpose. “Consumer debt” under §101(8) is debt incurred by an individual primarily for a personal, family or household purpose. That classification matters because §707(b)'s Chapter 7 abuse regime applies to an individual whose debts are primarily consumer debts; it is not simply an income test imposed identically on every individual bankruptcy. Chapter 13, by contrast, may be used by qualifying individuals who are self-employed or operate an unincorporated business, subject to §109(e)'s requirements. 6

Claim R038-C009. Direct authority: 11 U.S.C. §101(8), (10A), §707(b).

Pre-filing credit counseling. Subject to statutory exceptions, an individual must receive an approved credit-counseling briefing during the 180-day period before filing. Section 109(h) contains exceptions involving incapacity, disability, active military duty in a combat zone, unavailable approved services and a limited exigent-circumstances mechanism; a consumer should not treat “emergency bankruptcy” as an automatic waiver. If counseling produces a debt-management plan, it is filed in the bankruptcy case. 6

Claim R038-C010. Direct authority: 11 U.S.C. §109(h).

Current monthly income. For bankruptcy purposes, “current monthly income” is a statutory historical measure rather than simply the debtor's income on filing day. The U.S. Courts describes it as the average monthly income received over the six calendar months preceding commencement, with specified household contributions included and Social Security income excluded. Known or virtually certain changes can matter elsewhere in the analysis, but the statutory CMI calculation itself starts with that backward-looking window. 6

Claim R038-C011.

Current means-testing data. For cases filed on or after July 15, 2026, DOJ's U.S. Trustee Program directs filers to the July 15, 2026 Census/IRS dataset. The page expressly says the median-family-income data are used on Forms 122A-1 and 122C-1 and that national standards apply nationwide while housing/utilities and transportation Local Standards vary geographically. 4

Claim R038-C012. Direct source: DOJ UST Means Testing — cases filed on/after July 15, 2026.

For illustration, DOJ's current table gives California median family income figures of $79,253 for one person, $102,797 for two, $116,541 for three and $139,071 for four for this filing period. Those are annual comparison figures, not exemptions and not a definition of disposable income. 8

Chapter 7 means-test presumption. The April 1, 2025 adjustment changed the §707(b)(2)(A)(i) statutory thresholds to $10,275 and $17,150. In simplified algebra, after the statutory expense calculation, let (D) equal 60 times the resulting monthly disposable amount and let (U) be nonpriority unsecured debt. The operative threshold is:

[ T=\min(\max(25%\times U,\ $10{,}275),\ $17{,}150). ]

The statutory presumption arises when (D) is not less than that threshold, subject to the rest of §707(b), including special-circumstances rebuttal. 3

Claim R038-C013. Direct authority: 11 U.S.C. §707(b)(2); 90 Fed. Reg. 8941, lines corresponding to §707(b).

Being under median generally ends the Form 122A-2 presumption inquiry, but it does not convert the Code into a categorical entitlement to a Chapter 7 discharge; §707(b)(3), eligibility rules, bad-faith issues, disclosure failures and §727 objections remain separate. Conversely, being above median does not itself establish abuse. 4

Claim R038-C014.

There is also a current temporary means-test exclusion for certain National Guard members and reservists. The current Rules page says the National Guard and Reservists Debt Relief Act exclusion has been extended to December 19, 2027 and is implemented through Interim Rule 1007-I where adopted. 9

Claim R038-C015.

Property of the estate. Filing ordinarily creates an estate comprising broadly defined legal and equitable interests of the debtor as of the commencement of the case, subject to statutory inclusions and exclusions. Chapter 13 additionally brings certain postpetition property and earnings into the estate under §§1306 and 541 until the relevant statutory endpoint, which is one reason continued disclosure during an open Chapter 13 case matters. The Supreme Court's 2026 Keathley decision arose from an undisclosed postpetition personal-injury claim in an open Chapter 13 case. 10

Claim R038-C016. Direct authority: 11 U.S.C. §541, §1306.

Exemption choice and interstate moves. Section 522(b)(3)(A) generally looks first to the state in which the debtor was domiciled for the 730 days immediately preceding filing. If there was no single qualifying state throughout that period, the statute looks to the place in which the debtor was domiciled for the longer part of the 180 days immediately preceding that 730-day period. The statutory “safety net” can make §522(d) available where the choice-of-law mechanism otherwise leaves the debtor ineligible for any exemption. Courts have had to address extraterritorial state laws under this structure. 5

Claim R038-C017.

Current federal exemptions. For cases commenced April 1, 2025 through March 31, 2028, unless superseded by legislation, the current adjusted §522(d) amounts include the following. 3

The federal list also protects categories without the same simple dollar cap, including prescribed health aids and specified rights to benefits or support, subject to each subsection's language. A consumer should therefore not equate the table with the entire federal exemption system. 5

Sections 522(o), (p) and (q) are federal overlays that can restrict even otherwise generous state homestead law. Section 522(o) addresses value traceable to certain transfers of nonexempt property made during the ten years before filing with intent to hinder, delay or defraud creditors; §522(p) limits certain interests acquired during the 1,215 days preceding filing, subject to its exceptions; and §522(q) imposes a separate cap in defined misconduct/debt circumstances. 11

Claim R038-C020.

Exemption does not automatically eliminate a lien. Section 522(f) can avoid certain judicial liens to the extent they impair an exemption and certain nonpossessory, nonpurchase-money security interests in statutorily listed property. That is categorically different from consensual mortgages or ordinary purchase-money car liens. A debtor can therefore have “fully exempt equity” and still have to deal with a consensual secured creditor. 5

Claim R038-C021.

Automatic stay. Section 362(a) generally stays commencement or continuation of prepetition collection actions, enforcement of judgments, acts against estate property, lien-enforcement acts, setoff and collection of prepetition claims. Sections 362(b) and related provisions contain exceptions, including important categories for criminal proceedings, domestic-support/family matters, specified tax acts and certain residential-eviction situations. 6

Claim R038-C022. Direct authority: 11 U.S.C. §362.

A creditor may seek termination, modification, conditioning or annulment of the stay for “cause,” including inadequate protection; §362(d)(2) separately addresses property in which the debtor lacks equity that is not necessary to an effective reorganization. Thus, “filing permanently saves the collateral” is not a valid general statement. 12

Claim R038-C023.

Serial cases require special caution. Under §362(c)(3), one prior case pending and dismissed during the preceding year can cause specified stay protection to terminate on the 30th day unless the debtor obtains an extension after the required showing and timely hearing. Courts have divided over the scope of the phrase “with respect to the debtor,” particularly estate property. Under §362(c)(4), two or more qualifying dismissed cases during the preceding year can mean that the stay does not go into effect automatically, although the Code permits a timely request to impose one. These rules have statutory exceptions and cannot safely be summarized as simply “one prior case = 30 days, two = no stay” without the circuit/specific-case qualification.

Claim R038-C024. Direct authority: 11 U.S.C. §362(c)(3)–(4).

Chapter 13 adds a separate co-debtor stay under §1301 for qualifying consumer debt owed with another individual. It is not a discharge for the co-obligor and has statutory grounds for relief. Chapter 7 has no equivalent general consumer co-debtor stay. 6

Claim R038-C025.

The Supreme Court's Fulton holding must be stated narrowly: mere retention of estate property seized before bankruptcy does not violate §362(a)(3). The opinion did not transform all continued creditor conduct into permissible conduct or erase turnover rights under §542 and other stay provisions. 13

Claim R038-C026.

Trustees and the §341 meeting. A private case trustee is appointed in individual Chapter 7 and Chapter 13 cases. Chapter 7 trustees administer and, where economically justified, liquidate nonexempt estate assets. Chapter 13 trustees evaluate the case and plan and act as disbursing agents. Almost all current U.S. Trustee Program §341 meetings are virtual through Zoom; the trustee, not the bankruptcy judge, conducts the meeting and examines the debtor under oath. 14

Claim R038-C027.

DOJ currently instructs debtors, ordinarily at least 14 days before the §341 meeting unless the trustee sets another timeframe, to securely provide identification, Social Security-number evidence, current-income evidence and applicable bank/investment account statements and means-test documentation. The most recently filed prepetition federal return or transcript is to be furnished at least seven days before the first date set for the meeting. Trustee requests can require additional materials. 14

Claim R038-C028.

The U.S. Trustee Program also resumed debtor audits effective February 20, 2026 after a suspension that had begun in 2025. An editorial product that says bankruptcy audits are suspended would therefore be stale as of this report's check date. 15

Claim R038-C029.

Chapter procedures, claims, plans, discharge, costs, and failure modes

The filing package. A consumer case generally begins with Official Form 101 plus schedules and statements identifying assets, liabilities, income, expenses, contracts/leases, exemptions and financial history. The required package for an individual commonly includes Schedules 106A/B through J as applicable, Summary 106Sum, Statement of Financial Affairs 107, declaration, Form 121 for the Social Security-number statement, and the applicable means-test forms—122A series in Chapter 7 and 122C series in Chapter 13. Chapter 7 also uses the statement of intention concerning secured consumer property; Chapter 13 requires a plan, using Official Form 113 unless a district is authorized to use a local plan form. The national bankruptcy forms are maintained by the U.S. Courts. 16

Claim R038-C030. Direct forms source: U.S. Courts Bankruptcy Forms.

The Code separately requires documents such as payment advices received during the 60 days before filing, information regarding monthly net income and anticipated changes, and information concerning qualified education accounts. Section 521(e) creates the tax-return delivery obligation. Failure to file information required by §521(a)(1) within the statutory period can trigger §521(i)'s automatic-dismissal mechanism, subject to the statute's exceptions and extension procedure. 6

Claim R038-C031.

The 2025-amended Federal Rules of Bankruptcy Procedure are the current Rules on October 22, 2026. Absent an applicable exception or court extension, many schedules and statements not filed with the petition are due 14 days after filing under Rule 1007(c). A Chapter 13 plan is likewise generally filed with the petition or within 14 days under Rule 3015(b). 9

Claim R038-C032.

Proofs of claim. The current Rule 3002(c) framework generally uses a 70-day period from the order for relief for nongovernmental proofs of claim in Chapters 7, 12 and 13, with specific exceptions and special provisions; governmental units generally receive the statutory 180-day period under §502(b)(9). Local notice and the actual case docket control. The current Chapter 13 Bankruptcy Basics page still recites an older “90 days after the first date set for the meeting” formulation and should not be used as the publication authority for the current general deadline. 9

Claim R038-C033.

A filed claim is not automatically correct merely because the creditor says so. Section 502 governs allowance and objections; Rule 3001 governs claim form/support and evidentiary consequences. Debts can be scheduled as disputed, contingent or unliquidated where accurate. For §109(e), however, whether a disputed obligation is nevertheless “liquidated” can involve circuit law; “disputed = excluded from Chapter 13 debt limits” is not a safe national rule.

Claim R038-C034. Direct authority: 11 U.S.C. §§501–502; current Federal Bankruptcy Rules.

Current court filing fees. As checked October 22, 2026, current court materials show $338 total for Chapter 7 and $313 total for Chapter 13. Chapter 7's current total is composed of the $245 statutory filing fee, administrative fee and trustee surcharge; Chapter 13 uses the $235 statutory fee plus the administrative fee. Several courts announced inflationary miscellaneous-fee changes for December 1, 2026; those are future-effective and must not be back-applied to October filings. 17

Claim R038-C035.

An individual debtor can seek installments, normally no more than four, with the final installment due within 120 days, extendable for cause so long as the last installment is paid no later than 180 days after filing. A qualifying Chapter 7 individual may seek a filing-fee waiver if income is below 150% of the applicable poverty measure and the debtor cannot pay in installments. There is no parallel statutory Chapter 13 fee waiver. 2

Claim R038-C036.

Attorney fees are not nationally fixed. They vary with district, complexity, litigation and representation model; Chapter 13 districts frequently have local presumptive/no-look practices, but those are local court practices rather than universal federal prices. Debtor's counsel compensation is disclosed and subject to bankruptcy-court review under §329 and Rule 2016. Any SettleADebt.com article stating a single national bankruptcy-lawyer price should be held unless it is expressly a survey with methodology and date.

Claim R038-C037.

Chapter 7 liquidation. A Chapter 7 trustee collects and reduces to money estate property that is not exempt or otherwise excluded when doing so will meaningfully benefit the estate; property that is burdensome or of inconsequential value can be abandoned under §554. Distribution of unencumbered proceeds follows the Code's priority structure rather than pro rata payment of every debt from dollar one. 2

Claim R038-C038.

Many consumer Chapter 7 cases are administered as “no asset” cases because no nonexempt value is available for distribution after considering liens, exemptions and administration economics. Creditors are ordinarily instructed not to file claims in a no-asset case until a possible distribution is identified; discovery of assets can cause a later claims notice. This does not mean that the debtor had “no assets”; it means no assets are presently available for creditor distribution.

Claim R038-C039.

Secured personal property in Chapter 7. Discharge of personal liability is not a right to keep collateral without dealing with the lien. Depending on the facts and property, options can include surrender, reaffirmation or statutory redemption. Section 722 permits redemption of qualifying tangible personal property intended primarily for personal, family or household use from a lien securing a dischargeable consumer debt when the property is exempted or abandoned, generally by paying the allowed secured claim amount. Reaffirmation is governed by §524(c)–(k), requires prescribed disclosures and timing, and can restore enforceable personal liability on the reaffirmed obligation. 18

Claim R038-C040.

A reaffirmation agreement may generally be rescinded before discharge or within 60 days after the agreement is filed with the court, whichever is later. Representation and undue-hardship provisions can affect whether judicial approval is needed. A creditor's particular form or underwriting policy cannot change the Code's mandatory reaffirmation requirements.

Claim R038-C041. Direct authority: 11 U.S.C. §524(c)–(k).

Pre-filing transfers and favored creditors. A Chapter 7 trustee may pursue preferential transfers under §547, generally looking at transfers to creditors during the 90 days before bankruptcy and a one-year period for insiders, subject to the many statutory elements and defenses. For cases commenced after April 1, 2025, §547(c)(9)'s consumer-debt de minimis figure is $8,575. Section 548 supplies a federal fraudulent-transfer reachback of two years; §544 can make longer state-law avoidance periods relevant. Payments to relatives and last-minute asset transfers are therefore material pre-filing facts, not harmless bookkeeping. 3

Claim R038-C042.

Chapter 13 first payment and plan. Unless the court orders otherwise, §1326(a)(1) generally requires the debtor to begin making plan payments within 30 days after filing or the order for relief, even though confirmation has not yet occurred. The plan itself is generally due with the petition or within 14 days. 6

Claim R038-C043.

Plan duration is ordinarily linked to income. The U.S. Courts states that a below-median debtor generally has a three-year applicable period unless a longer period is approved for cause, while an above-median debtor generally has five years; no Chapter 13 plan may run longer than five years. Paying unsecured allowed claims in full can permit a shorter plan in circumstances contemplated by the Code. 6

Claim R038-C044.

Confirmation is not based on an arbitrary settlement percentage. Section 1325 requires, among other things, statutory compliance and good faith, proper secured-claim treatment, feasibility, satisfaction of the Chapter 7 liquidation comparison in §1325(a)(4), specified domestic-support compliance and required tax filings. If the trustee or an unsecured creditor makes the relevant objection, §1325(b) generally requires either full payment of allowed unsecured claims or commitment of projected disposable income for the applicable period. 19

Claim R038-C045.

The §1325(a)(4) “best interests of creditors” test means that unsecured creditors must receive at least as much value under the Chapter 13 plan, as of the plan's effective date, as they would receive in a hypothetical Chapter 7 liquidation. Thus nonexempt home equity, vehicle equity, valuable claims and other nonexempt property can raise the minimum Chapter 13 payout even though Chapter 13 permits the debtor to retain the property. 19

Claim R038-C046.

Secured claims in Chapter 13. If collateral is retained, §1325(a)(5) generally requires the plan to satisfy the applicable statutory secured-claim treatment, including retention of the lien and present-value treatment absent acceptance or surrender. The “hanging paragraph” following §1325(a)(9) prevents use of §506 to bifurcate certain purchase-money motor-vehicle debt incurred for the debtor's personal use within 910 days before filing, and certain other purchase-money collateral acquired within one year. The rule is not “all car loans must be paid in full”; collateral purpose, purchase-money status, timing and plan treatment matter. 6

Claim R038-C047.

Home mortgages. Section 1322(b)(2) generally protects the rights of a claim secured only by the debtor's principal residence from plan modification, while §1322(b)(5) allows cure of defaults and maintenance of payments on qualifying long-term debt. Section 1322(c)(1) addresses the outside point for curing a principal-residence default, tied to sale at foreclosure under applicable nonbankruptcy law. When a state-law foreclosure sale became final is therefore a state-law question with federal bankruptcy consequences. 20

Claim R038-C048.

A categorical statement that Chapter 13 always allows “lien stripping” of a second mortgage is unsafe. Whether a junior residential lien can be treated as entirely unsecured implicates §506, §1322(b)(2), circuit precedent and collateral valuation; a partially secured principal-residence claim presents a different anti-modification issue. Publication hold: any tool promising junior-lien elimination needs circuit-specific validation.

Priority claims. Section 507 ranks defined classes, including domestic-support obligations, administrative expenses, specified employee/deposit claims and qualifying taxes. Chapter 13 generally requires full deferred cash payment of §507 priority claims unless the holder agrees otherwise, subject to the Code's specific exceptions. Priority status and nondischargeability are related but not identical concepts and should not be merged in editorial copy. The April 2025 adjustment set, among other amounts, the §507(a)(4) wage cap at $17,150 and the §507(a)(7) consumer-deposit cap at $3,800. 3

Claim R038-C049.

Chapter 7 discharge. A discharge under §727 eliminates qualifying personal liabilities, but §523 creates debt-specific exceptions and §727 creates grounds to deny the debtor an overall discharge. Material concealment or transfer of estate property, false oaths, destruction or concealment of financial records, unexplained asset loss, refusal to obey qualifying orders and specified prior-discharge periods can jeopardize the Chapter 7 discharge.

Claim R038-C050. Direct authority: 11 U.S.C. §727.

Major §523 categories include specified tax claims; debts obtained by qualifying fraud or false pretenses; fiduciary fraud/defalcation, embezzlement or larceny; domestic-support obligations; willful and malicious injury; specified fines/restitution; covered educational debt absent undue hardship; death or personal injury resulting from unlawful intoxicated driving; and qualifying divorce/separation property obligations. Each exception has its own elements. “Credit cards are dischargeable” or “taxes are never dischargeable” are both overbroad formulations.

Claim R038-C051. Direct authority: 11 U.S.C. §523.

The current §523(a)(2)(C) presumptions use adjusted thresholds of more than $900 for specified luxury goods/services within 90 days and more than $1,250 for specified cash advances within 70 days, subject to the statutory definitions and creditor/debt aggregation rules. These are evidentiary presumptions within the fraud exception, not a general ban on using credit before bankruptcy. 3

Claim R038-C052.

The Supreme Court's Bartenwerfer v. Buckley is especially important when liability for another person's fraud exists under nonbankruptcy law. The Court held that §523(a)(2)(A) precluded discharge of a debt obtained by fraud even though the debtor herself lacked the fraudulent culpability, because she was legally liable for her partner's fraud. It therefore is unsafe to say “a debt is dischargeable if the debtor personally did not commit the fraud.” 21

Claim R038-C053.

Student loans. Section 523(a)(8) does not say that every debt marketed as a “student loan” is nondischargeable. It covers specified governmental/nonprofit educational loans and benefits and certain qualified education loans; a covered debt is excepted unless requiring repayment would impose “undue hardship.” The usual procedural vehicle is an adversary proceeding. 22

Claim R038-C054.

DOJ and the Department of Education have a standardized process for federal student-loan undue-hardship cases, including an attestation form and guidance for government attorneys. The U.S. Trustee Program's page was updated in March 2026 and links the operative policy materials. That guidance is federal creditor/litigation policy, not an amendment to §523(a)(8), not an automatic discharge, and not a policy binding private educational lenders. 23

Claim R038-C055.

Tax debt. Income-tax discharge cannot safely be reduced to a “three-year/two-year/240-day rule.” Section 507(a)(8) and §523(a)(1) contain the timing architecture, but late-filed returns, fraudulent returns or willful attempts to evade tax, tolling events, assessments, offers in compromise and tax liens create additional issues; treatment of late returns has also generated circuit-level doctrine. Tax liens can retain in-rem consequences even where personal tax liability is discharged.

Claim R038-C056.

Discharge litigation deadlines. Rule 4007(c) generally requires complaints under §523(c)—principally the specified fraud, fiduciary and willful/malicious-injury categories—to be filed no later than 60 days after the first date set for the §341 meeting, subject to a timely motion to extend. Rule 4004 uses a similar general 60-day deadline for objections to a Chapter 7 discharge under §727. Other dischargeability questions can have different procedural rules.

Claim R038-C057. Current rules source: Federal Rules of Bankruptcy Procedure, Rules 4004 and 4007. 9

Chapter 13 discharge. Completion discharge under §1328(a) follows completion of plan payments plus required certifications, including domestic-support and debtor-education requirements where applicable. The Chapter 13 discharge remains somewhat broader than Chapter 7 in defined respects; for example, the U.S. Courts notes differences involving property-settlement obligations and willful/malicious property injury. A hardship discharge under §1328(b), available only if its separate requirements are satisfied, is narrower than the ordinary completion discharge. 6

Claim R038-C058.

Discharge injunction. Section 524(a) replaces the stay with a permanent injunction against collection of discharged personal liabilities. In Taggart v. Lorenzen, the Supreme Court adopted an objective civil-contempt standard: contempt is inappropriate where there is a fair ground of doubt as to whether the discharge order barred the creditor's conduct. 24

Claim R038-C059.

Prior discharges versus repeat filings. Eligibility to file, availability of a new discharge and availability of a new automatic stay are separate questions. In Chapter 7, §727(a)(8) generally bars a new Chapter 7 discharge when a prior Chapter 7 or 11 case resulting in discharge was commenced within eight years; §727(a)(9) addresses prior Chapter 12/13 discharges within six years with statutory payment exceptions. For a Chapter 13 completion discharge, §1328(f) uses four years after a prior Chapter 7/11/12 case and two years after a prior Chapter 13 case. Those time periods run from the relevant prior filing/commencement dates as the statutes specify, not simply from the discharge date.

Claim R038-C060.

Section 109(g) can separately bar a person from being a debtor for 180 days after specified willful failures to obey court orders/appear or after a voluntary dismissal following a creditor's stay-relief request. This is different again from §362(c)(3)–(4)'s serial-stay rules. 6

Claim R038-C061.

Dismissal and conversion. Dismissal usually terminates the case without producing a new discharge and §349 addresses reinstatement/revesting effects, subject to court orders and statutory exceptions. A Chapter 13 case can be dismissed or converted for statutory cause, including material plan-payment defaults. Conversion has separate estate rules in §348(f), particularly for property and postpetition earnings; a bad-faith conversion receives different treatment. 6

Claim R038-C062.

State, tribal, program, and contract boundaries

State exemptions require two separate questions: which state's law applies under federal §522(b)(3), and what does that state's current law protect? It is unsafe to answer the second before answering the first. State law can also change through indexed dollar amounts, legislation and constitutional provisions, so a web page's “updated” date cannot substitute for the legal effective date. 5

The following matrix maps the current §522(d) election question, not each state's 2026 exemption amounts. The 2026 secondary surveys found the federal §522(d) option in Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington and Wisconsin; all other states are presently described as opt-out jurisdictions. 25 Because those nationwide lists are secondary sources and this investigation did not open the current official code of every state, rows not independently primary-checked below are a publication hold for state-specific legal content. That qualification is deliberate: a discovery list is not being represented as primary verification.

R038-C063 — State amount hold. The table above answers the federal-election dimension but deliberately does not publish a purported 2026 homestead, vehicle, wildcard and wage figure for every state. Many state amounts are indexed or were recently amended, and primary current inflation notices were not opened for all jurisdictions. This remains the report's largest evidence gap. Any SettleADebt.com state exemption calculator should stay on publication hold until every state's operative statute, constitutional provision where applicable, and current official index adjustment are separately checked.

Arizona illustrates why. Its official §33-1133 opt-out provision is easy to verify, while the homestead statute has an inflation-adjustment mechanism; an old statutory face amount or a search-result amount is not enough to prove the current filing-date number. 28

California presents a different complexity. California has opted out of §522(d), but California bankruptcy debtors encounter state-law exemption alternatives rather than a single national-style list. Any content that says “California's bankruptcy homestead is $X” without specifying the applicable exemption system, effective date, residence facts and annual adjustment is incomplete. 30

Tribal creditors. In Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, the Supreme Court held that the Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian tribes, through §§106(a) and 101(27). The case itself arose from a tribal payday-loan collection dispute after a Chapter 13 filing. This means a tribal creditor cannot invoke tribal sovereign immunity as a categorical shield from the relevant Bankruptcy Code enforcement mechanism, although the substantive debt, security agreement, tribal law and jurisdictional facts can still matter. 42

Claim R038-C064.

Federal student-loan program layer. DOJ/Department of Education's attestation and litigation process is a creditor/government-policy overlay on §523(a)(8), not a separate bankruptcy chapter and not legislation. Private educational creditors should not be described as bound by it. 23

Creditor policy versus contract. Core bankruptcy effects do not depend on an unpublished “creditor bankruptcy policy”: the Code controls stay and discharge, while the actual contract and applicable nonbankruptcy law determine such predicates as whether a security interest exists, what collateral it reaches, whether another person is liable, whether a bank has contractual setoff language, and whether cross-collateralization or guaranty language exists. No named creditor/product was assigned in A038, so this report does not invent creditor-specific reaffirmation, settlement or repossession policy. A complete real contract becomes necessary when an article makes a named-creditor claim—for example, “Creditor X's unsecured personal loan is actually secured by a deposit account”—at which point the complete operative agreement and amendments must be obtained.

Claim R038-C065 — Contract publication rule. Never infer “unsecured” solely from the marketing category. Check the note/cardmember agreement, security agreement, UCC/title perfection where relevant, guaranties and account-opening terms. Bankruptcy discharge affects liability only after the legal character of the debt is identified.

Consequences, settlement suitability, and worked examples

Federal cancellation-of-debt tax. IRC §108(a)(1)(A) excludes qualifying cancellation of indebtedness from federal gross income when the discharge occurs in a Title 11 case and the statutory requirements are met. That does not mean “bankruptcy has no tax consequences.” Section 108(b) can reduce tax attributes; §1017 governs certain basis reductions; liquidation or disposition of property can create separate tax issues; and state income-tax conformity is a separate state question. 7

Claim R038-C066.

For an individual Chapter 7 or 11 debtor, federal tax law can create a separate bankruptcy estate as a taxable entity; the tax treatment of Chapter 13 is different. IRS Publication 908 is the operative IRS reference rather than generic debt-relief tax articles. 43

Claim R038-C067.

Chapter 13 debtors also have continuing tax obligations. IRS materials state that required returns for the four tax years ending before the petition generally must be filed as required by the Bankruptcy Code and that current returns/taxes must continue during the case. Failure can affect Chapter 13 administration. 44

Claim R038-C068.

The federal qualified-principal-residence indebtedness cancellation exclusion should not be assumed available in 2026 simply because an older debt-settlement article mentions it; IRS's 2025 Publication 4681 materials state that the special QPRI exclusion did not continue for qualifying discharges after the statutory 2025 endpoint described there. This does not alter the separate Title 11 bankruptcy exclusion. 45

Credit reporting. The Fair Credit Reporting Act generally prohibits reporting Title 11 cases that antedate the report by more than 10 years, subject to statutory exceptions to the obsolescence restrictions. CFPB likewise tells consumers that bankruptcies can remain on consumer reports for up to ten years while most other adverse information generally has a seven-year period. This is a reporting ceiling, not a guaranteed bureau deletion date for every bankruptcy type or a prediction of credit-score recovery. 46

Claim R038-C069.

Accurate adverse information generally cannot be forced off a report simply because a consumer pays a credit-repair company. Consumers can dispute inaccurate reporting, including a creditor that continues to report an unpaid collectible balance inconsistently with a discharge. CFPB also states that debt collectors may not collect debts discharged in bankruptcy and that bankruptcy can block collection while the automatic stay is in force. 47

Claim R038-C070.

There is no defensible universal claim such as “your score drops 200 points,” “you can buy a house exactly two years later,” or “Chapter 13 remains seven years while Chapter 7 always remains ten.” Mortgage-insurance and investor programs use separate eligibility rules that change over time, and bureaus may use policies shorter than the FCRA maximum. Program-specific waiting-period content should be researched by program and effective date rather than attached to a general bankruptcy article.

Bankruptcy discrimination protections. Section 525 prohibits specified governmental discrimination based on bankruptcy/insolvency/nonpayment of dischargeable debt and also prohibits a private employer from terminating or discriminating with respect to employment against an individual solely because of the protected bankruptcy status/conduct. The provision is not a universal right to obtain private credit after bankruptcy, and its government and private-employer subsections are not identical. 48

Claim R038-C071.

Ongoing disclosure and recovery of legal claims. The Supreme Court's June 11, 2026 decision in Keathley v. Buddy Ayers Construction makes a current disclosure point especially important. A Chapter 13 debtor omitted a postpetition personal-injury claim; when a nonbankruptcy defendant invoked judicial estoppel, the Supreme Court rejected the Fifth Circuit's overly rigid test and held that inadvertence/mistake must be assessed under the totality of circumstances rather than merely by asking whether the debtor knew underlying facts and had a motive to conceal. The decision does not authorize nondisclosure: the safer operational rule is to disclose newly acquired assets and claims promptly as required. 49

Claim R038-C072.

Settlement suitability comparison. Bankruptcy and negotiated settlement solve different problems. Chapter 7 can be powerful where debts are predominantly dischargeable unsecured obligations, active collection requires a federal stay, and nonexempt property exposure is acceptable. Chapter 13 can be materially different from settlement where the debtor needs to cure secured arrears over time, protect a consumer co-debtor, retain nonexempt property, satisfy priority obligations through a binding plan, or cannot obtain a Chapter 7 discharge on the desired terms. Informal settlement can make sense where a debtor can fund consensual resolutions and wishes to avoid filing, but it has no §362 stay, cannot force a holdout creditor into a settlement merely because others agreed, and may present nonbankruptcy cancellation-of-debt tax consequences. 6

Claim R038-C073.

A debt-management plan through credit counseling is another distinct alternative: unlike bankruptcy it does not create a federal discharge or automatic stay. Direct creditor hardship programs, refinancing/consolidation, defending collection claims, exercising exemption rights without bankruptcy, or simply maintaining protected income/property can also be relevant, but each requires separate affordability, limitations, collection-risk and contract analysis. No alternative should be described as universally superior.

Protected-income warning. Social Security benefits are expressly excluded from “current monthly income” for the bankruptcy means-test definition described by U.S. Courts, but “excluded from CMI” is not synonymous with “every dollar in every bank account is automatically exempt from every creditor.” Exemption, tracing, federal anti-alienation law, setoff and state-law execution protection are separate analyses. 6

Claim R038-C074.

Worked example — California median comparison. Assume an individual is filing Chapter 7 in California on October 22, 2026, has a household of four, and the six-month CMI average is $10,500 per month. The annualized comparison is:

[ $10{,}500\times 12=$126{,}000. ]

DOJ's current California four-person median is $139,071, so this hypothetical debtor is below the applicable median on Form 122A-1. That ends this example; it does not prove that Chapter 7 will be allowed, that no assets can be sold, or that every debt will be discharged. 8

Claims: R038-C012, R038-C014.

Change only one input: CMI = $12,000/month.

[ $12{,}000\times12=$144{,}000. ]

That is $4,929 above the $139,071 comparison figure, so the debtor proceeds to the applicable above-median expense calculation; the result still is not an automatic finding of abuse. 8

Worked example — statutory abuse threshold. Assume after the statutory deductions a hypothetical debtor has $240 monthly means-test disposable income and $50,000 of nonpriority unsecured debt.

[ D=$240\times60=$14{,}400 ]

[ 25%\times$50{,}000=$12{,}500 ]

[ T=\min(\max($12{,}500,$10{,}275),$17{,}150)=$12{,}500 ]

Because $14,400 is not less than $12,500, the numerical presumption would arise under the assumed inputs, subject to the rest of §707(b), including special-circumstances provisions. The April 2025 statutory thresholds are current on October 22, 2026. 3

Claim: R038-C013.

Notice the nonintuitive result if unsecured debt is instead $100,000:

[ 25%=$25{,}000,\qquad T=\min($25{,}000,$17{,}150)=$17{,}150. ]

With the same $14,400 sixty-month amount, this particular numerical presumption would not arise. This is why a generic “you fail the means test above $X income” calculator is legally inadequate.

Worked example — Chapter 7 home equity. Assume a federal-exemption choice jurisdiction, a debtor legally eligible to elect §522(d), a $500,000 house, a $400,000 unavoidable mortgage and the current $31,575 federal homestead exemption. Assume, solely for illustration, $40,000 in sale costs.

[ $500{,}000-$400{,}000=$100{,}000\text{ gross equity} ]

[ $100{,}000-$31{,}575=$68{,}425\text{ equity beyond exemption} ]

[ $68{,}425-$40{,}000=$28{,}425 ]

That $28,425 is only a preliminary hypothetical estate value before trustee compensation, tax, administrative claims and transaction-specific costs. It demonstrates why “home equity minus homestead exemption” is not itself a trustee-sale prediction. If state exemptions apply instead, the entire example has to be rebuilt under that state's operative law. 3

Worked example — Chapter 13 liquidation floor. Assume the same debtor instead files Chapter 13 and a properly modeled hypothetical Chapter 7 liquidation would produce $20,000 for general unsecured creditors after allowed liens, exemptions and administration costs. If unsecured claims total $80,000, §1325(a)(4) prevents confirmation of a plan that gives those creditors less than the required $20,000 liquidation value simply because a creditor would have accepted 10% in an informal settlement. Projected disposable income can separately require a higher result. 19

Claims: R038-C045, R038-C046.

Worked example — 910-day vehicle rule. Assume a debtor bought a vehicle for personal use 700 days before filing, the purchase-money loan balance is $30,000 and the vehicle is worth $20,000. Because 700 is within the 910-day period, the statutory hanging paragraph can prevent §506 bifurcation of that qualifying claim; the plan cannot simply call $20,000 secured and $10,000 unsecured on these assumptions. If instead the acquisition occurred 1,000 days before filing, the 910-day rule itself no longer supplies that bar, although every other secured-claim and confirmation requirement remains. 6

Claim: R038-C047.

Worked example — repeat filing. Assume one prior bankruptcy was pending and dismissed six months before a new case. Section 362(c)(3) becomes immediately relevant, with a 30-day statutory event and a limited period to obtain extension upon the required showing. Assume instead two qualifying prior dismissed cases during the year; §362(c)(4) can prevent the automatic stay from arising in the new case absent a court order imposing it. The exact scope must still account for statutory exceptions and circuit interpretation.

Claim: R038-C024.

Worked example — settlement versus Title 11 tax. Assume a $20,000 unsecured debt is consensually settled outside bankruptcy for $8,000 and $12,000 is cancelled. The arithmetic cancellation is:

[ $20{,}000-$8{,}000=$12{,}000. ]

That does not mean $12,000 is automatically taxable; one must test the relevant IRC §108 exclusions, such as insolvency where applicable. But if the same qualifying liability is discharged in a Title 11 case, §108(a)(1)(A) supplies a distinct bankruptcy exclusion, with possible tax-attribute reduction. State tax consequences remain a separate question. 7

Claim: R038-C066.

Source and claim-evidence registers

The register distinguishes sources actually opened/rendered in this investigation from materials obtained only through search retrieval. “Discovery-only” does not satisfy the requested primary-verification standard for publication, even where the source appears reliable.

The claim/evidence register below is the compact audit trail for consequential findings.

Coverage, gaps, publication holds, and content opportunities

The following table treats an overview source as insufficient where the assigned seed requires operative rules, numbers or jurisdiction-specific evidence.

Publication holds. The most consequential holds are: any 50-state exemption-dollar table; any 2026 state homestead calculator not backed by current primary state material; any universal bankruptcy attorney-fee number; any creditor-specific settlement/reaffirmation policy without the actual contract and current creditor evidence; any fixed credit-score drop or credit-recovery timeline; mortgage-program waiting periods without current program authority; generic “tax debts discharge after X years” copy; generic “student loans cannot be discharged” copy; and any December 1, 2026 Rules/fee statement written as though it were already effective on October 22.

Distinct article opportunities. The evidence supports separate pieces on “Chapter 7 vs. Chapter 13 without settlement-percentage myths”; “the six-month means-test window and July 2026 DOJ data”; “automatic stay exceptions and the Fulton repossession problem”; “what exemptions actually do—and why they do not erase liens”; “910-day car loans in Chapter 13”; “tax debts: why the 3/2/240 shorthand is incomplete”; “student-loan bankruptcy after the DOJ attestation process”; “repeat bankruptcy: filing eligibility, discharge eligibility and stay eligibility are three different clocks”; “bankruptcy and credit reporting: what ten years really means”; “tribal lenders after Lac du Flambeau”; and “postpetition lawsuits after Keathley.”

Tool opportunities. A defensible consumer tool should expose its inputs instead of returning a black-box “qualifies/doesn't qualify” result. The strongest candidates are a means-test screening worksheet that dates the DOJ dataset; a Chapter 13 debt-cap classifier distinguishing secured/unsecured, contingent and liquidated status; an exemption-jurisdiction engine that asks the full 730/180-day domicile history before showing any amounts; a home-equity liquidation worksheet showing liens, exemptions, hypothetical sale expenses and administrative uncertainty; a serial-filing stay clock that explicitly warns about §362(c)(3) circuit differences; a prior-discharge eligibility clock separating §§727, 1328 and 109(g); a 910-day vehicle date calculator; and a debt-type discharge matrix separating ordinary unsecured, secured, priority, fraud, DSO, student, tax and DUI liabilities.

The exemption engine should not launch nationally until the state-law publication hold is cleared. The correct sequence is domicile selection → federal-option status → operative state/federal exemption set → filing-date adjustment → asset category → lien analysis → exemption value. Starting with “What state do you live in today?” is legally insufficient because §522(b)(3)'s lookback can select a different state's law.

Researcher self-check

This self-check is an audit of this research session, not an independent legal review.

Authority checks actually performed. Current federal numerical amounts were checked against the Judicial Conference's opened 90 Federal Register 8941 notice, including §109(e), §507, §522, §523, §547 and §707 figures and the April 1, 2025 effective date. 3 Current rule status was checked on the opened U.S. Courts Rules page, which states that the Bankruptcy Rules were last amended in 2025 and confirms the current Guard/reservist interim-rule period. 9 Current means-testing applicability was checked on the opened DOJ July 15, 2026 page. 4 Current §341 document practices were checked on the opened DOJ meeting page. 14 Chapter 7 and 13 institutional explanations were opened rather than relying solely on snippets. 6

Case-law checks actually performed. The Supreme Court PDFs for Bartenwerfer, Fulton, Lac du Flambeau and the 2026 Keathley decision were directly retrieved, and relevant syllabus pages were visually rendered for this investigation. 56 Taggart was retrieved from the Supreme Court source with parsed opinion text, although the screenshot call for that PDF did not successfully render. 24

Cross-source consistency checks actually performed. The current Chapter 13 debt caps were cross-checked between the Federal Register's adjusted-dollar table and U.S. Courts' current Chapter 13 page. 3 The U.S. Courts Basics pages were compared with current court fee materials, revealing that the Basics pages' $75 administrative-fee language is stale relative to the current $78 administrative fee and $338/$313 totals. 6 The Chapter 13 Basics proof-of-claim description was also treated as stale rather than silently reproduced, because the current Rules page points to the operative 2025-amended Rule 3002. 9

Geographic check actually performed. Primary/current or official institutional exemption material was specifically retrieved for Arizona, Oregon, Georgia and California, and federal-court authority was retrieved for several additional opt-out states. 28 A current nationwide list was used only to identify the remaining state-election map and gaps; it is explicitly labeled secondary/discovery-only rather than primary verification. 25

Known research limitations. The investigation did not obtain and open the operative official state exemption statute plus current indexing/effective-date notice for every state. Accordingly, it does not claim a primary-verified national 2026 state-dollar table. It also did not conduct fifty separate circuit/district analyses of §362(c)(3), late tax returns, junior residential lien stripping, local Chapter 13 trustee percentages, attorney “no-look” fees or foreclosure-sale completion. Those matters remain explicitly jurisdiction-sensitive rather than being filled with generalized answers.

No specific creditor was assigned, so no creditor contract was treated as representative of all creditors and no creditor-specific settlement/reaffirmation percentage was invented. No private borrower data was accessed. No people or institutions were contacted. No account changes, publishing actions or local/shared-library writes were performed or claimed.

Future-effective material. The current report does not treat announced December 1, 2026 Rules or fee changes as law already in effect. The current Rules page states 2025 is the last effective amendment set as of October 22. Announced future changes require an effective-date recheck before a post-December publication is represented as current. 9

Overall research judgment. The federal A038 framework—Chapter 7/13 structure, current debt caps, current federal exemption figures, July 2026 means-testing baseline, stay architecture, trustees, plans, secured/priority treatment, principal discharge rules, major deadlines, current filing fees, tax/credit framework, tribal immunity and 2026 Supreme Court disclosure development—is sufficiently supported for a reusable federal reference. The major unresolved publication-grade component is state-by-state current exemption amounts and associated state-specific foreclosure/lien rules. Those gaps are intentionally visible rather than replaced with secondary estimates or “rules vary” shorthand.