Reviewed program guide
Chapter 7 Bankruptcy
Chapter 7 can clear many ordinary debts, but student loans stay in place unless a bankruptcy judge makes a separate undue-hardship finding in a second, related case. This is a California attorney consultation about whether filing fits your situation.
Chapter 7 is the federal case most people mean when they say they are filing bankruptcy. You file a petition and sworn financial schedules, a trustee reviews what you own and what you owe, property that California exemptions do not protect can be sold to pay creditors, and eligible debts are wiped out at the end. Here is the part borrowers are most often surprised by: the discharge order the court mails you says on its face that most student loans are not included. Federal law keeps them out unless a judge separately finds that repaying them would be an undue hardship, and that finding comes only from a second case filed inside the bankruptcy. Filing Chapter 7 on its own can still change your finances by clearing credit cards, medical bills, and other unsecured debt.
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At a glance
Overview
Chapter 7 is the federal case most people mean when they say they are filing bankruptcy. You file a petition and sworn financial schedules, a trustee reviews what you own and what you owe, property that California exemptions do not protect can be sold to pay creditors, and eligible debts are wiped out at the end. Here is the part borrowers are most often surprised by: the discharge order the court mails you says on its face that most student loans are not included. Federal law keeps them out unless a judge separately finds that repaying them would be an undue hardship, and that finding comes only from a second case filed inside the bankruptcy. Filing Chapter 7 on its own can still change your finances by clearing credit cards, medical bills, and other unsecured debt.
Who it may help
This conversation fits you if you live in California, your income and property are modest, and the debts sinking your budget are things other than student loans. It also fits borrowers who simply want a straight read on whether bankruptcy helps at all before paying anyone. An attorney looks at your income over the past six months, household size, what you own, recent transfers or payments to relatives, any earlier bankruptcy case, and whether a court-supervised repayment case under a different chapter would serve you better. If the student loans are the whole reason you are considering this, say so on the first call, because Chapter 7 by itself does not reach them. Screening can organize preliminary facts and records, but screening cannot determine qualification or select a final path.
How it works
It starts with a session at an approved credit-counseling agency, which federal law requires within the 180 days before filing. Next come the petition, the full creditor list, and sworn schedules of your income, expenses, property, and debts. Filing triggers a court order that pauses most collection while the case runs. A trustee is appointed, you attend a meeting of creditors with photo identification and proof of your Social Security number, and you complete a short financial-management course afterward. Several deadlines are unforgiving: the schedules are due shortly after the petition, and your latest federal tax return has to reach the trustee before the creditors' meeting or the case can be dismissed. The court issues the discharge once every required step is done and nothing is left contested. Administrative support can help organize forms, records, and communications; it does not replace the decision-maker's review.
Documents and next steps
Expect to gather photo identification and proof of your Social Security number; pay stubs or other proof of everything you earned in the sixty days before filing; your most recent federal tax return; bank, retirement, and investment statements; deeds, vehicle titles, and value estimates for what you own; and a complete list of every creditor with a mailing address, including each student-loan holder, servicer, and collection agency, exactly as they bill you. You will also need the certificate from the credit-counseling agency, and later the certificate from the financial-management course. Missing pay stubs are the most common hold-up, so start there. The next step is to compare the records with the cited official source and any current instructions issued by the responsible agency, court, creditor, or other decision-maker.
Read this carefully
Important considerations
The biggest one is scope. Chapter 7 addresses your other debts; the student loans are a separate fight, described on the adversary-proceeding pages of this site. California also opted out of the federal exemption list, so you choose between two California sets, one built around protecting home equity and one that spreads protection across other property, and you cannot mix them. Those amounts are republished on a set schedule, so they are checked when your case is prepared rather than quoted from memory. A discharge also does not stop a lender from collecting from anyone who cosigned, and a spouse who does not file has separate exposure worth thinking through. Attorney fees in a bankruptcy case are disclosed to the court and can be reviewed by the judge. Attorney judgment is separate from administrative help and is required for individualized legal strategy or advice.
Common questions
Frequently asked questions
These answers provide general information. Your facts and records determine what may apply.
If my Chapter 7 goes through, are my student loans gone?
No. The discharge order the court sends you lists student loans among the debts it does not touch. Federal law keeps them out unless a judge separately finds that repaying them would be an undue hardship on you and your dependents, and that finding comes only from a second case filed inside the bankruptcy, called an adversary proceeding. Nothing forces the issue on its own either: no deadline makes the loan holder raise it, so if that lawsuit is never filed, the loans simply continue after your other debts are cleared. Plenty of people still file, because clearing credit cards and medical bills changes what they can afford on the loans. If the loans are the whole reason you are here, tell the attorney at the first call.
Is Chapter 7 worth filing if student loans are most of what I owe?
That depends on the rest of your picture, and it is a suitability question an attorney should answer in writing before you retain anyone. Clearing credit cards, medical debt, and old collection accounts can free real money each month even though the loans remain. There is also a technical wrinkle worth knowing: the income test that decides whether a Chapter 7 filing is presumed abusive applies to people whose debts are mostly consumer debts, and courts have not agreed on whether a debt load dominated by student loans counts that way. Your attorney has to take a position on that before your case is prepared, and it can change the analysis.
Will I lose my house or my car?
Not necessarily, and the answer turns on California's exemption rules rather than on federal ones. California opted out of the federal exemption list and gives you a choice between two state sets: one built around home equity, the other protecting a wider mix of property. You pick one set, not both, and if you are married and filing alone, your spouse's written waiver can be required for one of them. The dollar amounts are adjusted on a published schedule, so the right choice depends on current figures and on what your home and vehicles are actually worth today. Property that no exemption covers can be sold by the trustee to pay creditors. This election is a per-case decision an attorney makes with you.
Official sources
- Administrative Office of the U.S. Courts (opens in a new window)
Retrieved Jul 24, 2026
Important disclosure
This page provides general information, not a qualification or legal determination. Screening and services cannot guarantee approval, forgiveness, discharge, settlement, timing, or any particular result. The responsible agency, court, creditor, or other decision-maker applies the controlling requirements.
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