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How much debt I need to file bankruptcy

How Much Debt Do You Have To Have To File Bankruptcy

When considering how much debt do you have to have to file bankruptcy, the bankruptcy code does not impose a minimum amount of debt to file bankruptcy. So, to answer how much in debt to file bankruptcy? We have found that most clients have at least $10,000 in debts when filing bankruptcy.

Chapter 7 bankruptcy eligibility requirements

As noted earlier, Chapter 7 bankruptcy does not require a minimum amount of debt to file. To be eligible for Chapter 7 bankruptcy you must pass a means test to determine if you have disposable income to repay your debts. Chapter 7 does not impose a minimum or maximum debt amount to file for bankruptcy.

You are required to compare your income to the average income of a household of your size in the state where you live. If your average income is below that amount, you passed the means test. If it is over the average amount, you may still be able to apply some expenses to see if you pass the second part of test.

In addition to passing the means test, you must also complete a credit counseling course from and approved credit counseling agency within the 180 period prior to filing for bankruptcy.

A bankruptcy attorney will advise if you are eligible to file, what is needed to file, which type of bankruptcy, and how it will affect your credit.

Chapter 13 bankruptcy eligibility requirements

Although chapter 13 does not require a minimum debt amount it does have a $2,750,000 limit on the total amount of debt an individual can have as of the date of filing. See 11 U.S.C. sec 109(e). Only individuals can file chapter 13, and not businesses. Chapter 11 bankruptcy may be an option if you exceed the Chapter 13 debt limit.

The other requirement for chapter 13 is that the Debtor, or individual filing, have regular income.

What debt can be discharged in bankruptcy?

In Bankruptcy you can discharge most unsecured debts such as credit card debt, medical bills, and personal loans.

Student loans, alimony and child support, and most IRS debt is not discharged in bankruptcy.

Secured debts such as mortgages and car loans must be given special attention since if you list those debts in your bankruptcy and do not pay them in a timely manner, although you may remove your personal liability, the creditor will be still be able to take action to repossess the property or collateral securing the loans.

It is important to obtain a credit report where you will see your credit cards and secured debt.

Factors That Will Help You Determine When To File Bankruptcy

Now that we’ve established that there’s no minimum debt to file bankruptcy, the following factors will help you determine if you should file:

  • Most of your debts are dischargeable in bankruptcy.
  • Your credit score is already below 600 and you are paying high interest rates on credit cards.
  • Your financial situation is not improving and you are looking for a fresh start.
  • Your creditors have filed lawsuits against you or are garnishing your wages.
  • You’ve attempted to make payments and it has become too much to bear.
  • You may be facing foreclosure or repossession of a vehicle.

The above factors are non-exclusive and each situation is different.

When should you not file for bankruptcy

If you cannot discharge the majority of your debts in bankruptcy, you should not consider bankruptcy unless there is some specific benefit that does not involve obtaining a discharge such as saving a home from foreclosure or getting current on secured debt.

You should always consult with a bankruptcy attorney to explore the pros and cons of filing for bankruptcy.

Contact the Stiberman Law Firm For A Free Consultation

Bankruptcy is a complex process, and it’s important to understand how much debt you have to have to file and what are the eligibility requirements. If you are considering filing for bankruptcy, it’s important to speak with an experienced bankruptcy lawyer who can help you navigate the process and protect your rights.

The Stiberman Law Firm offers free consultations so that you can get all of your questions answered before making any decisions. Contact us today to get started on your path to financial freedom.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney with more than 13 years of experience in consumer Chapter 7 and Chapter 13 cases. Robert regularly practices in the Miami, Fort Lauderdale, and West Palm Beach Divisions of th... Read More

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