You don't need a particular amount before filing for bankruptcy. Having a minimum requirement might encourage people to go deeper into debt, and that's not something bankruptcy courts would want to do. Ultimately, deciding if bankruptcy will be worthwhile is up to you.
If you're not sure, answering these questions might help:
If you decide bankruptcy is a good choice, consider taking our quick ten-question bankruptcy quiz. It can help you spot potential bankruptcy issues fast.
Not all debt goes away in bankruptcy, and determining how much you can eliminate or "discharge" should be your first step. In Chapters 7 and 13, common types of dischargeable debt include credit card balances, medical bills, back rent or utility payments, personal loans, car leases, and gym memberships. But this isn't a complete list, and the way bankruptcy law is set up, it's easier to learn which debts you can't discharge in bankruptcy, so consider starting there.
Most attorneys won't accept a Chapter 7 bankruptcy client with less than $10,000 in dischargeable debt. Not only can $10,000 be difficult to repay, but anything less, and the court might question whether bankruptcy would be in the filer's best interests.
It's because bankruptcy comes with serious consequences. For instance, bankruptcy will affect your credit rating for up to ten years, and you won't qualify for another discharge for several years. It will also be more challenging to finance a home or car, rent a place to live, and open a bank account for some time.
Ultimately, it's up to you. If you're on the fence—or even if you're not—consider the following questions:
Chapter 13 bankruptcy doesn't have a minimum debt amount, but it does have debt maximums. If your secured and unsecured debt exceeds the limits, you won't qualify. You'll need to file an individual Chapter 11 instead. You'll find the current Chapter 13 debt limits on the U.S. Courts Chapter 13 Bankruptcy Basics webpage. You can also learn more in Chapter 11 vs. Chapter 13 Bankruptcy.
Most people don't file Chapter 13 for the sole purpose of wiping out debt unless they don't qualify for Chapter 7. Otherwise, Chapter 13 works best if you have a problem Chapter 7 can't fix, such as stopping a foreclosure or repossession permanently. You can use Chapter 13's repayment plan to pay off nondischargeable debts over time, such as support arrearages or new tax debt.
Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help you find the answers you need.
Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite or buy a self-help book like The New Bankruptcy by Attorney Cara O'Neill.
More Bankruptcy Information |
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Bankruptcy Forms and Document Checklist |
Chapters 7 and 13 Bankruptcy Form List You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage. The forms relating to this article topic include the following: Schedule D: Creditors Who Hold Claims Secured By Property (individuals) |
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
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