How Much Must I Owe Before I Can File Bankruptcy?

by Adrian Lapas, Esq.

February 17, 2010

Is there a minimum amount of money that you must owe before you can file bankruptcy?  No but the answer to this question is more nuanced than that.

Technically, there is no minimum amount of debt that you must owe before you can file bankruptcy.  But, when you consider that many attorneys charge anywhere from $1,500.00 to $2,500.00 for a chapter 7 bankruptcy filing (depending on how complicated) and that the filing fee alone for  a chapter 7 filing is $299.00, it would make sense to owe more than that sum.  Otherwise, just take the money that you would have spent on attorney’s fees and costs and pay your creditors.

But how much more should you owe before a bankruptcy filing is appropriate?  That is a question that is hard to answer and a lot depends on you as an individual and your circumstances.

For instance, if you are not paying your unsecured creditors and you do not have any non-exempt assets subject to levy by the sheriff, there may not be much that creditors can do to you if you do not pay (North Carolina is one of the few states that does not allow wage garnishment.

If your state allows wage garnishment, that may be a reason in favor of filing bankruptcy).  The creditors may get a judgment against you but that is probably not going to effect you a whole lot.  Thus, a bankruptcy filing would get rid of the debt but you weren’t paying the debt anyway so what benefit was gained?

Another situation is where the creditors are constantly calling you and, according to the creditors, the only way they will stop calling is for you to pay the debt.  If you are being hassled in this fashion but do not have a lot of debt (say $7,000.00 or so), you can tell the creditors to leave you alone (which should always be done in writing).  The creditors are supposed to stop but sometimes they like to ignore this requirement.  Or, perhaps you do not feel like shouldering this burden to notify creditors to cease and desist collection activities by yourself.  In this instance, a bankruptcy filing will get rid of the debt and terminate the collection calls.  Even though you do not owe a “lot” of debt, getting the calls to stop is of significant value to you.  Therefore, a bankruptcy filing may be worthwhile to you.

Finally, there may be other reasons that favor a bankruptcy filing even though you do not necessarily owe a lot of debt.  There may also be pitfalls as well.  The main thing to consider is that, if you file a chapter 7 case and you do not owe a lot of debt, you will be prohibited from filing another chapter 7 for eight years.

If you are unsure of whether a bankruptcy filing is appropriate, talk with an experienced bankruptcy attorney such as the ones on this website.  Any one of us will be happy to discuss the relative merits of a bankruptcy filing as opposed to other methods of dealing with debts.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.

Last modified: February 18, 2010