Debt Payoff

Why bankruptcy is a legal process, not a quick credit tactic.

Bankruptcy is a federal legal process with different chapters, eligibility rules, costs, and long-term consequences.

Reviewed July 18, 2026 1 minute read

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Bankruptcy is a federal legal process with different chapters, eligibility rules, costs, and long-term consequences.

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code"). The United States Constitution authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

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After the debt is gone

Give the old payment a new job.

Before investing, consider a starter emergency fund, any employer retirement match, and whether high-interest debt remains. Then the amount that used to go toward debt can become an automatic long-term contribution instead of quietly disappearing into monthly spending.

Consider a Roth IRA

A Roth IRA can provide tax-free qualified withdrawals in retirement, subject to eligibility, contribution, and withdrawal rules. A diversified fund or dividend reinvestment plan may help automate a long horizon, but neither guarantees returns.

Explore Stash

Start with $5. A qualifying minimum $5 deposit may provide each party a $30 investment credit under the current referral offer. Offer terms can change. Dividend income is not guaranteed and should not be relied upon to offset account fees.

Start with a taxable account

A standard brokerage account may fit money needed before retirement age. Compare fees, available investments, tax treatment, and the temptation to trade frequently before choosing a platform.

View the Robinhood offer

The current referral offer says eligible new users receive a gift stock valued from $5 to $200; approximately 99% receive about $5. Eligibility and terms apply and can change.

Affiliate disclosure: These links may provide a benefit to you and a referral reward to Matthew Murphy. That relationship does not change the educational cautions above.

Disclaimer: We are not a financial adviser. This content is for educational purposes only. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results. Research each option and consider your own goals, taxes, time horizon, and risk tolerance.

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