FAQs

What are the different types of bankruptcy?

  • What it is: You wipe out most of your debts by giving up non-essential assets.

    How it works: You report all your debts (credit card, medical, personal loans, car loans, mortgages, everything), all your assets, and all your income. Many people keep all their property because exemptions protect basic necessities like your home, car, and household items (with some limitations).

    Best for: People with mostly unsecured debt (credit cards, medical bills) and little income to repay debts

    Timeline: Usually 3-4 months from filing to discharge

  • Bankruptcy may be right for you if you're struggling to make ends meet, your monthly expenses are usually higher than your money coming in, and/or if you're facing foreclosure or repossession. You must meet income requirements and complete credit counseling before filing.

    It's a strong option when you can't realistically pay off your debts, but it's not right for everyone.

  • Chapter 7 bankruptcy eliminates most unsecured debts, but some obligations cannot be discharged. These typically include:

    • Child support and alimony

    • Recent tax debts (recent income taxes generally cannot be discharged)

    • Debts from fraud or intentional wrongdoing

    • Criminal fines and restitution

    • Debts from drunk driving injuries

    If a significant portion of your debt falls into these categories, we'll discuss that during your consultation and help you understand whether bankruptcy still makes sense for your situation.

  • What it is: You keep your property but repay debts over time through a court-approved plan.

    How it works: You make monthly payments to a trustee for 3-5 years based on your income. The trustee distributes money to creditors. After completing the plan, remaining eligible debts are discharged.

    Best for: People with regular income who are behind on house or car payments and want to catch up while keeping the property, or those who make too much money to qualify for Chapter 7.

    Timeline: 3-5 years to complete

  • What it is: Usually for businesses (though individuals can use it), allowing them to restructure debts while continuing operations.

    How it works: The business creates a reorganization plan to repay creditors over time while staying open. Much more complex and expensive than Chapter 13.

    Best for: Businesses or individuals with debts exceeding Chapter 13 limits

    Timeline: Varies widely, often 1-2+ years

Better Way focuses on helping individuals file for Chapter 7 Bankruptcy. If one of the other chapters is more appropriate for you, we can help connect you with another qualified attorney who can guide you through the process.

What is involved?

  • Bankruptcy is a legal process that helps people who can't pay their debts get a fresh financial start. It either eliminates most of your debts (Chapter 7) or creates a manageable payment plan (Chapter 13). Filing bankruptcy also stops creditors from calling you, garnishing your wages, or taking other collection actions immediately upon filing.

    1. Complete credit counseling: You'll complete a required credit counseling course before filing.

    2. Gather documents: We'll help you compile the financial documents needed for your petition, including the means test.

    3. File your petition: We file with the bankruptcy court, which immediately stops most collection actions.

    4. Attend a trustee meeting: You'll attend a brief meeting with the bankruptcy trustee, a court-appointed official who reviews your case to ensure everything is accurate and complete. Your attorney will be with you.

    5. Complete debtor education course: You'll complete a short financial management course after filing.

    6. Receive discharge:  The court discharges your eligible debts, giving you a fresh start.

    Chapter 7 bankruptcy typically takes 3–6 months from filing to discharge, which is a legal order that permanently eliminates your qualifying debts. From that point on, creditors can no longer pursue you for those amounts. Debt collection actions stop the day you file.

    Visit our page “Filing Process” to learn more.

  • The means test is a formula used to determine whether you're eligible to file Chapter 7 bankruptcy. It compares your average monthly income over the past six months to the median income for a household your size in Maine. If your income is below the Maine median, you normally qualify. If it's above, a second calculation looks at your expenses and disposable income to determine eligibility.

    We can help you fill out the required paperwork during your consultation 

  • Yes. The means test isn't just a conversation. It requires completing official federal forms that are submitted as part of your bankruptcy petition. Most individual debtors filing for bankruptcy relief are required to complete a version of Bankruptcy Form 122A. 

    The forms require documentation including recent pay stubs, tax returns, and income statements from all sources. Getting the means test right is critical. If you don't, it can doom your application for Chapter 7.This is one of the areas where having an attorney makes a real difference. At Better Way, completing and filing these forms accurately is part of what we handle for you, so you don't have to worry about making a costly mistake.

  • Before you can file for bankruptcy, federal law requires you to complete a brief credit counseling course from an approved provider. The course typically takes about an hour and can be completed online or by phone. It covers your financial situation, budgeting basics, and alternatives to bankruptcy.

    We'll point you to an approved provider during your consultation so you know exactly where to go and what to expect. The cost is usually $15–$50, and fee waivers are available if needed.

  • You are not legally required to hire an attorney; filing on your own is called filing "pro se." However, the data shows clearly that going it alone significantly reduces your chances of success.

  • Our flat fee is $2,200, plus the court filing fee of approximately $338 for Chapter 7. We'll walk you through total costs and payment options during your consultation so there are no surprises.

Who can file bankruptcy?

  • Yes. Having a job does not disqualify you from filing bankruptcy. In fact, most people who file Chapter 7 are employed; they're simply carrying more debt than their income can realistically manage. What matters is whether your income falls within the eligibility limits under the means test. We'll review your income during your free consultation to confirm you qualify.

  • Yes, self-employed individuals and small business owners can file for personal Chapter 7 bankruptcy. If your business debts are part of what's overwhelming you, bankruptcy may be able to help, though the analysis can be a bit more complex than a straightforward consumer case.

    Better Way focuses on personal Chapter 7 filings. We'll review your situation during your consultation and let you know whether we're the right fit, or connect you with someone who is.

  • Retirement and fixed income can actually work in your favor when it comes to bankruptcy eligibility. Social Security income, for example, is not counted in the means test calculation, which may make it easier to qualify for Chapter 7.

    Many retirees living on fixed incomes find that bankruptcy provides significant relief from credit card debt and medical bills that have become impossible to manage. We're happy to walk through your specific situation.

  • You must have lived in Maine for at least 180 days to file bankruptcy here. If you haven't yet met that threshold, you may need to file in your previous state, or wait until the 180-day requirement is satisfied. Better Way only works with clients in Maine at the moment. 

How will filing bankruptcy affect my life?

  • Most people keep their house, car, and belongings when they file bankruptcy. Maine has exemption laws that protect essential property, and as long as you're current on your mortgage and car payments and your equity falls within exemption limits, you can generally keep them.

    We'll review your specific assets during your consultation to make sure your property is protected.

  • Only the spouse who files will have the bankruptcy on their credit report. However, if you have joint debts, like a shared credit card or co-signed loan, creditors can still pursue your spouse for those amounts.

    If both spouses carry significant debt, filing jointly may make sense and can save on costs and increase some exemptions. Your spouse's income and separate assets will be considered in your case, but their individual credit and separate debts won't be directly affected. We'll help you determine whether filing individually or jointly is the better option for your situation

    It's a strong option when you can't realistically pay off your debts, but it's not right for everyone.

  • No. Federal law prohibits both government and private employers from firing you or discriminating against you in hiring decisions solely because you filed for bankruptcy.

    Note: Bankruptcy may affect certain professional licenses or security clearances in specific fields. We're happy to discuss any concerns during your consultation.

    We can help you fill out the required paperwork during your consultation 

  • Yes, though it may take some patience initially. Many landlords will still rent to you, especially if you can show stable income or offer a larger deposit. Auto loans are often available shortly after bankruptcy, and in some cases, your debt-to-income ratio actually improves after filing, making you a stronger candidate for financing than before.

    The forms require documentation including recent pay stubs, tax returns, and income statements from all sources. Getting the means test right is critical. If you don't, it can doom your application for Chapter 7.This is one of the areas where having an attorney makes a real difference. At Better Way, completing and filing these forms accurately is part of what we handle for you, so you don't have to worry about making a costly mistake.

  • Bankruptcy filings are public record, but in practice, almost no one finds out. Your neighbors won't be notified, and it's unlikely to appear in local news unless you're a public figure. Most people who file maintain complete privacy in their daily lives. Bankruptcy is far more common than most people realize, and nothing to be ashamed of.

  • It's natural to worry, but most people in your life won't know unless you choose to tell them. Bankruptcy is public record, but your friends and family aren't monitoring court filings. Many people who file are surprised to find, once they open up about it, that someone close to them has been through the same experience.

    What matters most is taking control of your financial future. Those who care about you will understand that you're making a responsible decision to get back on your feet.

What about my credit?

  • People can get their credit score up to 720 within a year of your bankruptcy and qualify for a mortgage in two years. Bankruptcy will lower your credit score and remain on your credit report for 10 years. But for most people considering bankruptcy, their credit isn't in great shape to begin with, due to late payments, collections, and high balances.

    We'll review your specific assets during your consultation to make sure your property is protected.

  • Rebuilding credit after bankruptcy is very achievable. Here's where to start:

    • Pay all bills on time: payment history is the single most important factor in your credit score

    • Get a secured credit card: use it regularly and pay the balance in full each month

    • Keep credit utilization low

    • Consider a credit-builder loan from a local credit union

    • Monitor your credit report to confirm that discharged debts are properly reported

    Many people qualify for mortgages and achieve healthy credit scores within just a few years of their discharge. The key is rebuilding slowly and deliberately, and avoiding the patterns that led to hardship in the first place.

  • Yes. Many people receive credit card offers shortly after discharge, though initial limits may be lower and interest rates higher. Secured credit cards – where you provide a deposit as collateral – are a great tool for rebuilding responsibly.

Is bankruptcy a sign of failure?

  • No. Bankruptcy is a right built into the foundations of our legal system. Article I, Section 8 of the U.S. Constitution specifically authorizes Congress to enact bankruptcy laws — a provision approved at the Constitutional Convention in 1787.

    The concept of debt relief has deep roots across many traditions and cultures, reflecting a longstanding understanding that circumstances beyond a person's control can lead to financial ruin — and that giving people a genuine path forward benefits everyone.

    Declaring bankruptcy is not a sign of moral failure. It's a legal tool designed to right the ship when financial hardship threatens to overwhelm an individual or family. And it's far more common than you might think.

    We'll review your specific assets during your consultation to make sure your property is protected.

  • Almost certainly. Bankruptcy is far more common than most people realize. Many well-known and highly successful people have filed for bankruptcy and gone on to thrive, including:

    • President Abraham Lincoln

    • President Donald Trump

    • Walt Disney

    • Henry Ford

    • Mike Tyson

    • Willie Nelson

    • Cyndi Lauper

    • 50 Cent

    • Dionne Warwick

    • Mickey Rooney

    • Kim Basinger

    Bankruptcy wasn't the end of their stories — it was a reset that allowed them to rebuild.