How Much Debt Is Worth Filing Bankruptcy
Minimum Debt To File Bankruptcy
There are no laws that set the particular amount you need to file for Chapter 7 bankruptcy. It is up to you to decide whether filing for bankruptcy is the right option for you. An experienced bankruptcy lawyer can review your case and help you determine if it’s the right decision for your particular circumstances.
Erasing Debt Through Bankruptcy
You can erase (discharge) a significant amount of your debt by filing for Chapter 7 bankruptcy. Before you file, find out how much you can actually discharge. Chapter 7 and Chapter 13 can help you wipe out debts such as:
- Personal loans
- Car leases
- Gym memberships
- Medical bills
- Credit card loans
- Utility payments
- Back rent
These are just some of the debts you can discharge.
What Your Attorney Will Consider For Chapter 7 Bankruptcy
While you are free to decide whether bankruptcy is the right choice or not, most attorneys only consider Chapter 7 clients that have at least a certain specified amount in dischargeable debt. Even courts are not likely to hear your case if you don’t meet that amount in dischargeable debt. This is because there are consequences to filing for bankruptcy, which means bankruptcy is an option of last resort.
Some consequences include:
- Your credit rating will be affected for ten years
- You won’t be able to file for bankruptcy for years to come
- It will be harder to finance a car and a home.
- Landlords will not allow you to rent their property
- Opening a bank account will be hard
When Should You File Chapter 7 Bankruptcy
Filing for bankruptcy is not an easy decision to make yet you are the only one who can decide. Before you file, consider the following:
- Negotiating with creditors to pay less than you owe. But know that you have to pay tax if the forgiven amount is more than a certain amount.
- If you owe less than 5 figures, find out whether you can pay it back by making some adjustments. Bankruptcy may be the right option if you’ll never be able to pay your debt.
- Work with a credit counseling agency to see whether you can pay less interest and pay off accounts in five years. But debt settlement agencies don’t work with all credit card companies, and you’ll still have to rebuild your credit score after you finish paying.
Should You File For Chapter 13 Bankruptcy?
There is no minimum debt amount that makes you eligible for filing Chapter 13. But there are limits that your secured and unsecured debts should not exceed. You can file for Chapter 11 bankruptcy if your debt exceeds the maximum limits or you do not qualify to file for Chapter 7 bankruptcy.
How To Navigate Your Bankruptcy Case
When Should I File For Bankruptcy
Bankruptcy is a qualification process where you must complete a bankruptcy petition of about 50 pages. To keep track of the process, you need an experienced bankruptcy lawyer. Your lawyer can help you with your research on the bankruptcy forms needed for Chapter 7 or Chapter 13 bankruptcy.