Do I Owe Enough to File for Bankruptcy? (Or too much?!)

Do I owe enough to file for bankruptcy is a question that I and my colleagues hear quite often. My initial response is the amount of debt you owe is relative to your financial situation. Many people feel overwhelmed by debt but are concerned that they don’t owe enough to consider bankruptcy as an option. However, in many instances a person’s credit has been so marred by the bad debts, although few, that a bankruptcy filing is a much quicker and less stressful avenue to getting back to a good credit rating. Of course, there is an element of logic or feasibility in determining if your debts are too few or too small to choose a bankruptcy option.  There are many reasons to file some form of bankruptcy even if your total amount of debt is small. You may be in fear of garnishment of your wages, repossession or judgments. A bankruptcy can stop these collection efforts and keep your wages under your control and in your pocket.

Some potential bankruptcy filers may also question if they owe too much to file for bankruptcy. The simple answer to this questions is no. However, there are certain debt limits for filing a chapter 13 consumer debt consolidation bankruptcy. In order to confirm a chapter 13 debt consolidation, you cannot include in excess of $383,175 in unsecured debt (credit cards, medical bills, signature loans, etc.) and $1,149,525 in secured debts (debts with collateral). If you exceed these debt limits, don’t be discouraged. There are other alternatives to consider. A better option may be a chapter 7 bankruptcy or fresh start bankruptcy or an “individual” chapter 11 (reorganization/debt consolidation) bankruptcy.

If you are struggling with any amount of debt and are unsure if a bankruptcy option may be right for you please call our office location that is most convenient for you and set up a free consultation to meet with one of our licensed and experienced attorneys to discuss your options.