What Are the Minimum (or Maximum) Debt Amounts to File for Bankruptcy?

24 Jul What Are the Minimum (or Maximum) Debt Amounts to File for Bankruptcy?

One question we’re often asked is what the minimum debt amount is to allow someone to file for bankruptcy. The answer is very simple: there is *no* minimum debt amount to be eligible to file. This is true for Chapter 7, Chapter 11, Chapter 12 and Chapter 13.

How did the rumor that you need to have a certain amount of debt to file? The likely answer lies in the fact that there is a maximum amount of debt to be eligible to file for Chapter 13: you can’t have more than $360,475 in unsecured debt, and can’t have more than $1,081,400 in secured debt to be able to qualify for Chapter 13. There are no maximum debt limits for Chapters 7 or 11; the total debt for Chapter 12 [family farmers] cannot be more than $3,792,650. This means that Chapters 7 and 11 are almost always available, regardless of how much debt you owe.

Not requiring a minimum amount of debt to file is a different question from whether you should file with a small amount of debt. I have counseled many clients over the years that, given a relatively small amount debt, it might not make sense for them to file. After all, you can only get a Chapter 7 discharge once every 8 years (although you can usually file Chapter 13 at any time, regardless of prior filings), and shouldn’t “use up” the discharge when you might need it in the future. This analysis differs depending on many factors. For example, a $5,000 judgment that has resulted in a garnishment on someone earning $20,000 a year would be approached very differently from the same judgment on someone earning $100,000 a year.

Rather than asking whether you have too much or too little debt to file, the better question to ask your bankruptcy attorney is whether, given all of your circumstances, bankruptcy is the best option for you. By the time most of my clients come in to see me, they have already tried everything short of filing, and bankruptcy is their best and least expensive option.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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