Skip to content

Paying for gender transition: Bankruptcy as a last resort

I have heard people making a gender transition say, “I will get it all done and then just declare bankruptcy.”

You never “just” declare bankruptcy. Bankruptcy often comes at a high price. In some cases, bankruptcy can be a good choice, but it should be a last resort. Doing it will affect your life for many years after.

Bankruptcy is legal and is your right in most countries. Many of us would not even have to think about bankruptcy if all insurance policies covered trans health care. Medical debt is the most common reason for bankruptcy in the United States.

Planning on bankruptcy is not a wise money plan. If you decide to declare bankruptcy, you need to have a very clear plan.


I am not a lawyer or accountant, and laws are different based on where you live. You will need to find out how what the law says where you live. Here are the basic parts.

Bankruptcy can be either voluntary (your choice) or involuntary (brought on by creditors). It can also be brought on if you have moved money to hide it from creditors or are found by a judge to have paid certain creditors more before the bankruptcy. For instance, if you pay your family and friends before your bank, you may get in trouble.

The US has one of the easiest bankruptcy systems in the world. A 1978 federal law made it even more easy. This was done so businesses that did not mean to fail would not be punished. That law made the number of personal bankruptcies go way up.


A bankruptcy stays on your credit report for 10 years, making it difficult to:

  • get credit
  • buy a home
  • get life insurance
  • get a job (in some cases)

Bankruptcy is done in federal court. There is a filing fee to pay. You will probably need to pay a lawyer to help. There are two kinds of personal bankruptcy:

Chapter 13

  • This is also known as reorganization, and allows debtors to keep some things they own like a mortgaged house or car. It often lets you repay on a default for three to five years instead of giving up property. However, if you do not have a good plan to catch up on your debt, they can take some things.

Chapter 7

  • This is straight bankruptcy or liquidation, where they sell off all assets not exempt in your state. You might be able to keep work tools and basic furniture. The court may sell your property through what is known as receivership or turn it over to creditors. You can only file Chapter 7 every six years.

Both types of bankruptcies might do the following:

  • get rid of unsecured debt (stuff like credit cards which require no collateral)
  • stop banks from taking your house (foreclosures)
  • stop banks from taking your car or other things you make a loan payment on (repossessions)
  • stop taking money from your paycheck (garnishments)
  • stop utility shutoffs
  • stop debt collection

It will probably not erase things you owe like:

  • child support
  • alimony
  • fines
  • taxes
  • some student loans

Bankruptcy resources

Please look into other options before bankruptcy. Here are a few places for more on what you might expect in your own case.

Federal Trade Commission ( (

  • Founded in 1974 as Consumer Credit Counseling Service, is a national non-profit organization with local offices around the nation. I used them and find them to be excellent. Phone: 800-388-2227.

American Bankruptcy Institute (

  • The American Bankruptcy Institute has a good page of basic terms, and an overview of Chapter 7 and Chapter 13 bankruptcies. I also recommend looking at their page on consumer options, which has a great basic Q & A. Phone: 703-739-0800

Next: Your four options

Disclaimer: This is legal talk, not legal advice. Laws vary by jurisdiction and change often. Some of this may not apply to you. It is presented without warranty. It may contain errors or omissions. You must do your own research.