Bankruptcy Mythbusting #7

Myth:  I don't have enough debt to file bankruptcy.

Fact:  There is no legal requirement or minimum amount of debt necessary to file for bankruptcy.  There may be more pragmatic concerns, such as whether you have enough debt to make filing bankruptcy worthwhile.  I generally try to discourage people from filing for bankruptcy with less than $6k in unsecured debt because the cost to benefit ratio becomes small, though I've had clients insist on filing bankruptcy over less than $4k in debt.  Usually, there is some other factor motivating bankruptcy, not just the amount of debt.  Most people have somewhere between $20k to $80 in unsecured debt.

You can have too much debt.  Chapter 13 has limitations on how much debt you can have.  If your debt exceeds those amounts, and do not qualify for a Chapter 7 Bankruptcy, you could be stuck with the much dreaded Chapter 11 bankruptcy (which is usually for corporations, but individuals sometimes file Chapter 11, too).  Fortunately, very few people have so much debt that they are faced with this scenario.

The good news is that an experienced bankruptcy attorney can look over the facts of your case and determine whether Chapter 7 or Chapter 13 is best for you before you make any commitments. Call (920) 490-6160 now to schedule a free consultation.