Can I File Bankruptcy if I’m in a Debt Relief Program?
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Yes, you can file bankruptcy even if you’re in or were in a debt relief program such as a debt management plan. Once you file your bankruptcy case with the court, you can stop making the payments under the debt relief plan you’re in (if you haven’t already). Once the bankruptcy court grants your discharge, you won’t have to worry about repaying the debts included in your case. Many people can benefit from other debt-relief options before filing bankruptcy, but sometimes bankruptcy is the best choice to meet your financial goals and take control of your debt.
Written by Jonathan Petts. Legally reviewed by Ben Jackson
Updated September 17, 2025
Can I File Bankruptcy if I’m in a Debt Relief Program?
Yes, you can file for bankruptcy even if you are in a debt relief program.
When you're struggling with debt, it can be overwhelming to know the right steps on the path to becoming debt free. Many people start with debt relief programs like debt management plans or debt settlement, hoping these will help them regain control. But sometimes, these efforts might not be enough.
If you still find yourself drowning in debt despite these attempts, it might be time to consider filing bankruptcy. Bankruptcy can offer a fresh start by wiping out your remaining debts and stopping collection actions, providing the relief you need to move forward.
If you have a simple case, you may be eligible to use Upsolve's free filing tool to prepare your Chapter 7 case. Upsolve is a nonprofit that's helped over 18,000 people get rid of over $844 million in debt.
What To Know About Filing Bankruptcy After Trying Debt Relief
If you decide to switch from a debt relief plan to Chapter 7 bankruptcy, there are a few things to know. One important thing is whether you’ve made any payments over $600 to your creditors in the last 90 days.
These are called preferential payments, and the bankruptcy trustee will flag them. The trustee can take back these payments to share the money fairly among all your creditors. This won’t stop your case from being successful, but it can cause some delays.
Three common debt relief programs are debt consolidation, debt settlement, and debt management plans. Let’s take a look at how each of these may impact your bankruptcy filing.
Can I File Bankruptcy if I’ve Consolidated My Debts?
It's perfectly fine to file for bankruptcy after trying debt consolidation if your financial situation changes and you can no longer make the payments. But experts advise waiting for at least 90 days to file your bankruptcy case after getting a debt consolidation loan.
Here’s why: When you consolidate your debt, you use a new loan to repay existing debt accounts. Then those accounts are closed, and you can focus on repaying the single loan, hopefully at a lower interest rate.
If you don’t wait at least 90 days after getting the consolidation loan, the bank that issued your loan may object to the discharge of your debt. They can argue that they wouldn't have given you the loan if they knew you were about to file a bankruptcy petition.
Be aware that knowingly and intentionally taking on new debt before filing for bankruptcy can be seen as bankruptcy fraud. If you're looking at ways to handle your debt that involve taking on more debt (for non-essential items), make sure that plan will really work for you. If not, consider your bankruptcy options instead.
Can I File Bankruptcy if I’ve Been Trying Debt Settlement?
You can file bankruptcy if you’re trying debt settlement, whether or not your negotiations have been successful.
The same concern about potential preferential payments applies here as it does with other debt relief options. If you paid a lender or debt collector more than $600 in the 90 days before you file your bankruptcy case, the bankruptcy trustee may consider this a preferential payment.
Again, this won’t stop you from getting your debts discharged through bankruptcy, but it can delay the timeline or cause some complications.
If you aren’t sure how your debt settlement efforts will impact your bankruptcy filing, you can set up a free consultation with a bankruptcy attorney to get some answers.
Can I File Bankruptcy if I’m in a Debt Management Plan?
Yes, you can file for bankruptcy even if you’re in a debt management plan (DMP). A credit counselor may have suggested a DMP to help you avoid filing for bankruptcy, but if you can’t afford the payments, you can file for bankruptcy instead.
Again, if you paid a single creditor more than $600 in the 90 days before filing, the trustee might recover those funds. But your obligation to pay the debts will be discharged.
Once you file for bankruptcy, you won’t have to make your monthly DMP payments anymore.
What’s Better: Bankruptcy or Debt Relief?
Each person has to answer this question for themselves, but you can get support in doing so!
Here’s where you can start: If you have a low income, you’ve tried paying down debt but haven’t been successful, and you have more debt than you can handle, Chapter 7 bankruptcy might be a good choice for you. It's especially helpful if you need quick relief from creditors or if your debt is causing you serious anxiety.
But if you feel like you just haven’t landed on the right debt repayment strategy yet, you might want to explore other options like debt settlement, debt consolidation, or a debt management plan.
You’ll also want to consider:
Debt: How much debt do you have? What kind of debt do you have?
Cost: How much will each option cost you? Is it DIY, or do you need to hire some help?
Timeline: How long will each option take you, and are you confident you can stick with the timeline?
Flexibility: How much flexibility do you need in your repayment strategy?
Credit score: How much does your credit score matter to you right now? Can you reach your financial goals if you choose this form of debt relief?
Potential negative consequences: Are you worried you might get sued or face wage garnishment if you don’t pay to get rid of your debt soon? Are you stressed about current collection efforts?
Frequently Asked Questions About Bankruptcy and Debt Relief
For even more information about bankruptcy and debt relief, you can visit Upsolve’s Learning Center.
Let’s Summarize…
Yes, you can absolutely file for bankruptcy relief even after attempting to work things out through an alternative debt relief program. Once your bankruptcy case is filed, you can stop making the payments under the debt relief plan you’re in (if you haven’t already) and your obligation to pay the debt will be eliminated for good when your discharge is entered.
If you have a simple Chapter 7 case, you take our quick two-minute screener to see if you qualify to use Upsolve’s free filing tool.
