Filing for bankruptcy this September? Here are 3 big questions to ask first.

The numbers tell a stark story about Americans' current financial struggles. Bankruptcy filings increased by 11.5% for the 12 months ending on June 30, 2025, according to data released in late July by the Administrative Office of the U.S. Courts, with individual filings jumping by 11.8% in June alone compared to the previous year. And, the total bankruptcy filings reached 276,126 cases during the first half of 2025 alone — a 10% increase from the same period in 2024. These numbers aren't just statistics, either. They represent hundreds of thousands of people who are grappling with overwhelming debt in today's tough economic landscape.

And, many of the reasons behind this uptick in bankruptcy filings are painfully familiar: medical emergencies that drain savings accounts, unexpected job losses that turn manageable payments into impossible mountains of debt and the relentless pressure of inflation eating away at household budgets. But while bankruptcy can help wipe the slate clean when debt feels overwhelming, it's also a legal process with far-reaching consequences, and the decision shouldn't be made in haste or without fully understanding what you're signing up for.

So, if you've been considering whether bankruptcy is the right move for your debt issues, it's important to pause before you make any moves and ask yourself some hard questions. Below, we'll detail three worth asking before filing this September.

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Questions to ask before filing for bankruptcy this September

Deciding whether it's right to file for bankruptcy is never easy, but asking yourself these critical questions can help ensure you're making the right choice for your unique situation. 

Will filing really get rid of my debt?

One of the biggest misconceptions about bankruptcy is that it wipes away all your debt. The reality, though, is more complex. While bankruptcy can eliminate many types of debt, certain obligations will stick with you no matter what type of bankruptcy you file.

Chapter 7 bankruptcy, which is the most common type for individuals, can eliminate unsecured debts like credit cards, medical bills, personal loans and most utility bills. Chapter 13 bankruptcy, on the other hand, involves a repayment plan, but can still discharge remaining qualifying debts after completion. However, both types of bankruptcy typically cannot eliminate student loans, recent tax debts, child support, alimony, court fines and debts obtained through fraud.

That means if student loans make up the bulk of your financial burden, bankruptcy may not provide the relief you're hoping for. Federal student loans are also notoriously difficult to discharge in bankruptcy. You'd need to prove "undue hardship," which courts interpret very strictly. Similarly, if you owe substantial back taxes or child support, bankruptcy won't make these obligations disappear, so take an honest inventory of your debts and calculate what percentage would actually be eliminated before deciding if bankruptcy is worth the long-term impacts it has on your finances.

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Have I considered the less damaging options?

Bankruptcy should be your last resort, not your first response to financial difficulty. After all, there are debt relief options that can help you regain control of your finances without the severe credit consequences of bankruptcy filing.

Debt consolidation, for example, allows you to combine multiple high-rate debts into a single payment, generally at a lower interest rate. Or, credit counseling agencies, which you're actually required to speak with before filing bankruptcy anyway, can help you create a debt management plan that negotiates reduced interest rates and monthly payments with your creditors. Debt forgiveness, while not the most ideal option for your credit, is another option that typically causes less long-term damage than bankruptcy and may resolve your debts for less than you owe.

Don't overlook negotiating directly with your creditors, either. Many companies would rather work out a payment plan or accept a reduced lump sum than risk getting nothing if you file for bankruptcy. Medical providers, in particular, are often willing to set up low-interest or interest-free payment plans or reduce bills significantly if you explain your financial hardship. And, credit card companies may lower your interest rate or monthly minimum if you explain your situation, especially if you have a history of making payments but are struggling due to a temporary setback.

Can I handle the long-term consequences?

Filing for bankruptcy affects more than just your credit score. It can also impact your employment prospects, housing options and future borrowing ability in ways many people don't anticipate. Chapter 7 bankruptcy, for example, stays on your credit report for 10 years, while Chapter 13 remains for seven years. During this time, you'll typically face higher interest rates on any loans you can qualify for, face increased hurdles when renting housing and could also encounter complications with professional licenses in certain fields.

Some employers also run credit checks, particularly for positions involving financial responsibility, meaning that a bankruptcy filing could affect your job prospects. Getting a mortgage will be challenging for several years, too, and when you do qualify, you'll likely encounter higher interest rates. Even seemingly unrelated services like setting up utilities or cell phone plans may require deposits due to your damaged credit.

The bottom line

Bankruptcy can be a powerful tool for getting out from under crushing debt, but it's not a decision to make lightly or quickly. Before filing this September, take time to honestly assess whether bankruptcy will actually solve your specific debt problems, explore all available alternatives and prepare for the long-term consequences. You may also want to consider meeting with both a credit counselor and a bankruptcy attorney to fully understand your options. The goal isn't just to escape your current debt, after all. It's to build a stable financial future that won't land you back in the same situation in the future.