Written by Charleston Bankruptcy Lawyer, Russell A. DeMott
One of my readers recently asked about how much debt he needed to file bankruptcy. That’s a good question, and I’m asked that frequently.
There’s no set amount of debt you must have to file bankruptcy. As I’ve said before, each case is unique. What might be too much debt to one person might be easily manageable for another. The issue is how much debt is too much debt for you.
However, if you:
- Have defaulted on payments;
- Are “robbing Peter to pay Paul;”
- Feel like all you think about is how you can make your payments;
- Are living on credit cards;
- Constantly worry about how you’ll pay your debts;
- Can’t see how you’ll ever pay off all your debt; or
- Fight with your spouse about debt
then there’s a good chance you need to talk to a bankruptcy lawyer about your situation. Know the warning signs. This doesn’t mean you should file–only that you should get professional help from someone who can explain all your options, bankruptcy or otherwise.
If you do file, there’s no magic amount of debt you must have for the court to grant your discharge. There’s no ratio or number you must “hit” to qualify for bankruptcy. Of course, filing bankruptcy costs money, so you would certainly not want to file to discharge only a few thousand dollars of debt. Filing bankruptcy must be cost-effective. The whole point, after all, is that you do something that will benefit you financially.
The important thing is to realize that your situation is unique. You shouldn’t decide to file or not to file bankruptcy because of what someone else did. I hear clients sometimes mention a friend’s case. That’s like comparing apples to oranges. Don’t do something based on rumors you hear about other cases. I’ve been doing this for over fifteen years now, and I can assure you that each case is unique.
So if you need help, get it. Worrying won’t help your financial problems. Take action and get your case evaluated by a qualified bankruptcy attorney in your area. I’ve never met one who would recommend filing when it wasn’t appropriate.
As you have said, the question of how much debt is too much debt is such a unique proposition. However, I often see Debtors who need to file a Chapter 13 case with a significant amount of debt, yet due to assets or income, they don’t take into account how much their plan payment may be. As a result, the question they often ask is not so much do I have too much debt, but rather, based upon the amount of debt, will a Chapter 13 help them pay less.
Good point, Michael.