How Much Debt to File for Bankruptcy

How Much Debt to File for Bankruptcy? All The Important Facts & Details

In this article, we’ll discuss the important topic of: “How Much Debt to File for Bankruptcy?”

To answer how much debt to file for bankruptcy, there is no such limit. Moreover, there are some other essential factors that you need to consider while you are filing bankruptcy. 

So, just having a load of debt is not enough to file for bankruptcy. There are many other factors that you should understand before you move towards the court. 

Here are some of the indispensable factors that you need to maintain and how much debt to file for bankruptcy

How Much Debt to File for Bankruptcy?

As mentioned earlier, there is no such minimum limit of debt that you need to have while filing bankruptcy. Of course, it is the most crucial factor because it is the amount of debt overloading you each passing day. But here are some of the serious questions that you should ask yourself while thinking of bankruptcy filing. 

  • Can you pay back your debts if you are provided with some extra period?
  • Is it possible that you can settle down with your creditors outside the court?
  • What is the debt types that you have right now?
  • What is the situation that you are currently in?

Apart from considering how much debt to file for bankruptcy, there are also other things around to look for. So, a convenient way out is to get in touch with an attorney who can help you deal with all this. 

Though you can quickly meet up with an attorney and understand the next steps, it is always better to first analyze your situation. Hence, it is a great idea to understand and analyze each factor that will help you simplify the process. Let us explore each of the critical factors in detail.

You Capacity to Pay the Debt:

Analyze the factors such as your income and capacity to pay off debts in a year or so. If you think that you can quickly pay off the debts in a year or two, it is always better to do it. If the creditors are troubling you too much, you can take up a bank loan to pay the debts off and can slowly pay the bank loan on a regular monthly basis. 

Identifying this factor is very much important because often, your filing of bankruptcy may get dismissed by the court if your income is sufficient to pay off the debt. If your income is adequate, you will not be eligible for debt discharge also by the court. 

Settling with the Creditors:

In place of ignoring your creditors, it is always better to talk to them upfront. It may happen that you might have faced a loss in your business. Many creditors may understand this situation of yours and may provide you some time to arrange for the debt payback. This can save much time and also the harassment of a court case. 

But if the creditors are not ready to understand your situation and are threatening of suing or are taking other actions, you can file bankruptcy. If you are definite that you just need a bit of extra time for the debt payment, you can file for bankruptcy and get a period of three to five years. When you have this protection from the bankruptcy court, you will be free from the creditors’ threats. Meanwhile, you can arrange for the amount and pay off the debts after the grace period you have. 

Debt Types:

It is also essential to consider the debt types that you are supposed to pay to your creditors. There can be different debt types that you may have to deal with, such as:

  • Any type of loans
  • Alimony
  • Tax obligations
  • Child support

You should consider a proper attorney based on the debt type that you have. For example, if your ex-wife has asked for alimony that is much higher than your income, you can surely go for a bankruptcy filing to wave it off or to get a reduction in it. 

What Situation Are You In currently?

It also hangs on what situation you are in while you are planning to file for bankruptcy. You can file for it in these situations such as:

  • The creditors are troubling you with threats of suing you or others,
  • You have lost the source of income through which you could have paid the debt,
  • The creditor is about to take control of your properties.

You can indeed file for bankruptcy in such situations so that either you get extra time or you can get the option of debt discharge

Summary

It is the most common question that many people ask how much debt to file for bankruptcy. But it is not the amount of debt that you have on you. The filing of bankruptcy also depends upon several other factors. Of course, when your creditors are kind enough to offer you some extra time for paying off the debts, there is no point in filing bankruptcy. Hence, it is always necessary to check through all the factors before taking this ultimate step. 

Discolsure: I am not a financial expert and it is highly recommended that you seek out a professional before making any financial decisions. Articles are informational and for educational purposes only.

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