How Much Debt Do You Need to File Bankruptcy?
If you are behind in paying your bills, you may have considered filing for bankruptcy, but are concerned that you do not have enough debt to qualify. Although there is no limit required in order to file bankruptcy, the amount and type of debt may determine what type of bankruptcy you file or whether it is the right answer for your circumstances.
MINIMUM DEBT AMOUNTS
The federal government does not require a person to have a minimum amount of debt in order to file for bankruptcy. Filing for bankruptcy actually depends on other factors, such as whether you are able to pay your debts without filing, your creditors will work with you or whether you can discharge the debts you have.
Your individual circumstances also have an impact on whether you are able to file. The only type of bankruptcy that has any type of debt limit is Chapter 13, but there is no minimum. To file Chapter 13, you cannot have more than $1,149,525 in secured debt or more than $383,175 in unsecured debt, although these amounts change based on inflation.
CREDIT COUNSELING VS. BANKRUPTCY
If you have a steady income, it is possible you can repay your debts without filing bankruptcy by working with a good credit counseling agency. Credit counseling agencies work with you and your creditors to help you pay off your debt.
Normally, they are able to reduce interest so payments are lower, allowing you to repay your debts at a lower cost. However, it is important to choose a reputable credit counseling agency as there are many who operate scam organizations, taking your money and not working with your creditors at all.
You can find a list of credit agencies approved by the United States Trustee under the Credit Counseling and Debtor Education section of their website. In some cases, you may be able to avoid a credit counseling agency and work directly with your creditors.
Under the law, certain debts are not dischargeable under bankruptcy. If you owe alimony or child support, you cannot discharge them under bankruptcy, even if you are in arrears.
You also cannot discharge priority tax debts, debts you incurred due to fraud or false pretenses or personal injury judgments related to drunk driving. Student loan debt is often not dischargeable unless you can prove the undue hardship exception. Under Chapter 13, you may be able to include your non-dischargeable debts in your repayment plan, however.
The amount of debt you have may not have any bearing on whether you can file bankruptcy. In order to determine if you should file for bankruptcy, contact our office to speak to a qualified bankruptcy attorney. We can review your case to determine if bankruptcy is your best option or if you should consider working with a credit counseling agency. You can set up your initial consultation by calling us or completing the easy form on our website.