Debt Requirements

08/21/20

     In this world, nothing is certain. It is not uncommon for some of the most financially responsible individuals to find themselves struggling to pay bills as a result of an unforeseen circumstance such as a global pandemic, illness, loss of employment or other unexpected situation. For these reasons, the United States Bankruptcy Code exists, which if utilized properly, can assist individuals in reclaiming financial stability.

     A vast majority of individuals have various uncertainties regarding whether or not they qualify to file bankruptcy such as doubts that they do not have enough debt.

     For a chapter 7 liquidation proceeding, there is no minimum threshold; however, for certain individuals, it may be more beneficial to attempt to negotiate with lenders as it may not be cost effective to incur legal fees and other costs associated with filing the proceeding. More importantly, this chapter requires that the filer’s income be below a certain level—this is determined by utilizing the “means test.”

     Chapter 13 also does not have a minimum debt requirement to qualify; however, there is a maximum limit of secured and unsecured debt a petitioner can have; however, most do not reach the limit and this is seldom an issue. In the rare circumstance that a filer has debts exceeding the limits imposed by chapter 13, that individual may instead qualify to file for chapter 7 or 13—neither of which have debt limits.

     When filing bankruptcy, it is imperative to retain the right attorney who can guide you or your business through the proceeding and make certain you achieve the best end result possible. We at the Litt Law Group have a bankruptcy team here to help guide you through this process. Please do not hesitate to contact our office for a free consult.