Do I Have to be Flat Broke to File Bankruptcy?

31 Jan Do I Have to be Flat Broke to File Bankruptcy?

Consumers frequently ask if they have to have a certain level of debt to qualify for bankruptcy or if they have to be without assets to file.  The answer to both questions is NO.  Generally, all it takes to qualify to file some form of bankruptcy is a willingness to submit your non exempt assets to the claims of your creditors.

Some Chapter 7 cases are 100% cases, where creditors get every cent they are owed, with interest.  Some Chapter 7 cases are “no asset” cases, where creditors get nothing.  And there are cases at every point in between.

In every state, the debtor gets to keep  some assets for their fresh start.  Exemptions is the one area where the applicable law varies from state to state; in every other aspect of bankruptcy, the law is the same from state to state.

An experienced bankruptcy attorney may counsel consumers with relatively small debt that there are other alternatives to dealing with their debt problems other than bankrutpcy.  My yardstick in these cases looks at the ability (or non ability) of the debtor to pay off the debts within 3-5 years.  If that is not possible, bankruptcy ought to be considered. 

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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