Reviewed and updated August 24, 2026.

Almost everyone who sits down across from me has been carrying the same beliefs about bankruptcy for months, sometimes years, by the time they call. Most of those beliefs are wrong, and the wrong ones are expensive. They're why people wait two years longer than they should, paying interest on debt that was never going to get paid off.

Here are the ones I hear most, and what's actually true in Arizona.

What Happens to Your Property

Will I lose everything I own?

This is the belief that stops people who should file. It's also the one least connected to reality. Most people keep everything they own.

Arizona's exemptions protect the ordinary things a household is made of. As of January 1, 2026, you can protect up to $437,600 of equity in your home, $16,500 of equity in a vehicle, $16,500 of household furnishings, and $5,600 in a bank account. Retirement accounts are fully protected.

In my own practice, the overwhelming majority of Chapter 7 cases are no-asset cases: the trustee looks, finds nothing outside the exemptions, and the case closes with the client keeping what they walked in with. That has held true across thousands of filings.

Exemptions apply to your equity, which is what a thing is worth minus what you still owe on it. A car with a loan against it usually has very little equity to protect.

Won't I be unable to own anything for years afterward?

No. Anything you acquire after your case is filed is yours. The estate is a snapshot taken on the filing date, not a standing claim on your future. People routinely buy cars and houses after bankruptcy.

What Happens to Your Credit

Will I ever get credit again?

Yes, and probably sooner than you expect. If this weren't true, nobody would file.

Here's the part that surprises people: you are often a better credit risk the day after your discharge than the day before you filed. Before, you were carrying debt you couldn't service. Afterward, that debt is gone and a lender knows you can't file again for years. What matters to them is your current stability and what you currently owe, far more than a filing on your record.

Make a few payments on time, usually starting with a secured card, and your score begins moving within months rather than years.

Who Finds Out

Will everyone know I filed?

Bankruptcy is a public proceeding, so the honest answer is that the record exists. But nobody is notified except your creditors, and in practice almost nobody looks. Hundreds of thousands of cases are filed every year. No publication has the space or the interest to print them, and unless you're a public figure or a large company, yours will not be news.

In twenty years of practice, I can count on one hand the clients whose filing ever came up socially.

Can I be fired for filing?

No. Federal law prohibits both government and private employers from terminating you because you filed for bankruptcy. It's one of the few protections in this area written out explicitly.

What Bankruptcy Does — and Doesn't — Erase

Will creditors keep calling after I file?

No. The automatic stay takes effect the moment your case is filed, and it stops collection outright: calls, letters, lawsuits, garnishment. A creditor who keeps contacting you after that is violating federal law, and there are remedies for it.

For most people this is the change they feel first. The phone stops.

Can medical bills and credit cards actually be discharged?

Yes. This one usually comes from something a collector told you. Nearly all unsecured contract debt is dischargeable, including credit cards, personal loans, medical bills, and old accounts sold off to collection agencies.

Does bankruptcy erase every debt?

No, and I'd rather you hear that from me than find out later. Some debts survive: most student loans, recent income taxes, child support and spousal maintenance, most court fines, and debts arising from fraud.

Tax debt is more nuanced than most people are told. Older income taxes can sometimes be discharged, and it's an area most bankruptcy attorneys refer out. See tax debt and bankruptcy.

Is there a minimum amount of debt?

There's no minimum in the law. The question isn't the size of the number, it's whether you can realistically pay it down in a reasonable time. Someone with $18,000 they can't service is in worse shape than someone with $60,000 they can.

Who Can File, and How

Does bankruptcy mean I failed?

No. This is the one I care most about.

Almost every case I've filed traces back to the same short list: a job loss, an illness nobody planned for, a divorce, a business that didn't survive. Circumstances, not character. I've met very few people whose trouble came from recklessness, and a great many whose trouble came from three years of trying to outrun interest that was never going to let them.

Bankruptcy exists in the law on purpose. Congress built it as a release valve so people aren't buried permanently under debt they can't repay. Using a remedy designed for exactly your situation isn't a failure of character. It's what it's for.

Do both spouses have to file?

Not necessarily. It's common for one spouse to carry most of the debt in their name alone, and in that case only that spouse may need to file.

Joint debts are where this gets complicated. If you're both liable and only one of you files, the creditor will simply pursue the other for the full amount. Where debts are joint, filing together usually makes more sense, and it costs less than two separate cases. Arizona's community property rules complicate it enough that it's worth an actual conversation rather than a guess.

Isn't it too expensive?

It costs something. The court's filing fee is $338 for Chapter 7 and $313 for Chapter 13, and there are two required courses on top of my fee.

The comparison that matters isn't cost against zero, though. It's cost against what you're already paying to stand still: interest and minimum payments on a balance that isn't moving. For most people that arithmetic isn't close.

Can't I just file it myself?

You can. Whether you should depends on how much you're risking.

The forms are the easy part. The judgment is what matters: which exemptions to claim and how, whether the timing of your filing could cost you a tax refund, what a trustee will look twice at, whether a Chapter 13 plan can survive five years. Get one of those wrong and you can lose property you were entitled to keep, and by then it's usually too late to fix.

If You Recognized Yourself in Any of These

Most of what's on this page is something I've explained across a desk to someone who'd been worrying about it for a year. If you'd rather ask about your own situation than read a general answer, that's what a consultation is for. It's free, in person or by phone.

You may also want: Chapter 7 in Arizona · Chapter 13 in Arizona · Arizona bankruptcy resources