Prospective bankruptcy filers often inquire whether they need minimum amount of debt or have a certain debt burden to justify a bankruptcy filing. If you’re fighting with debt, and wondering whether Chapter 7 bankruptcy could help you, one question that often comes to mind is whether you have enough debt to qualify for bankruptcy protection. There is no minimum amount of debt that you must have to file Ch 7 bankruptcy, but there are several other eligibility requirements. If you are unable to pay your debts and are facing lawsuits, wage garnishment, repossession or other threatening actions from creditors, bankruptcy can help you to regain control of your situation. Yet, there is no floor or lower limit to the amount of debts or debt burden a consumer must have to file bankruptcy under either Chapter 7 or Chapter 13. Common sense dictates that a person should not file for bankruptcy protection if the debt is manageable or can somehow be negotiated to a manageable level for repayment purposes.
In today’s down-turned economy, everyone who experiences severe financial difficulties qualifies for some sort of bankruptcy relief or protection. It is also not surprising in this economic climate to see that some individuals file for bankruptcy protection when the reality is that they owe very little to their creditors. There is an upper ceiling or limit on the amount of debt a consumer can possess and still file a Chapter 13 bankruptcy reorganization case. For instance, as of 2007, those limits were $1,010,650 for secured debt figures and $336,000 for unsecured debt totals and. Those debt limits slightly increases over time, to accommodate inflation, cost of living adjustments and the realities of the economy.
What Is the Importance of the Upper Debt Limit?
The significance of the upper debt limits is large. A debtor who owes liquidated and non-contingent debts in excess of either of the aforementioned limits will not even qualify to file a Chapter 13 bankruptcy case. Unfortunately, the game is over before it even has a chance to begin for that debtor. Incidentally, the upper debt limits apply to all individual bankruptcy courts located throughout the country. So, it does not matter where a debtor chooses ultimately to file his or her bankruptcy petition.
How Do You Know if You Should File Bankruptcy Or Not?
First and foremost, a debtor should have a reason prompting him or her to file bankruptcy. Most often the reason is that the debtor cannot afford to pay all of his or her bills on time. Some creditors and frugal-minded, fiscally prudent individuals may be sickened to learn the following reality. Often, there is also no limit to the amount of property a debtor can own and still qualify to file bankruptcy.
While bankruptcy isn’t for everyone, it is an option that you can investigate further with the help of a bankruptcy attorney. You can arrange a no-obligation, free initial consultation with a lawyer to know about various requirements and reasons to file bankruptcy.