How Much Debt To File For Bankruptcy
How Much Do You Have To Be In Debt To File Chapter 7
Bankruptcy is a legal tool meant to help you start afresh when you can no longer pay the debts you owe. The relief comes with several consequences such as being unable to get credit for a long time and having a hard time renting. So, only choose bankruptcy if there is no other way of getting out of your financial crisis.
This applies even if you have a low amount of debt. Get a Tampa Bankruptcy Attorney Free Consultation today.
How Much Debt Makes Bankruptcy Appropriate?
Minimum Amount Of Debt For Chapter 7
You file for bankruptcy because you are overwhelmed with debts and want some relief. So, there is no set minimum amount for filing for bankruptcy whether you are filing a Chapter 7 or Chapter 13 bankruptcy. But you need to inquire and research other solutions before you file for bankruptcy. Most debts can be paid within the next 6 months with a realistic plan.
This is especially true if you owe a dischargeable debt that is not more than four figures. Just don’t file if the total of the legal and filing fees will be more or almost the same as the amount you owe in the first place. Legal fees for bankruptcy cases can vary and may be costlier for certain situations.
So, if your debt is under a certain amount the court may suspect you are not filing for bankruptcy in good faith. You don’t want it to seem like you are filing for bankruptcy just to escape debt because that could lead to the court denying you the bankruptcy option in the future.
What Are The Ramifications Of Bankruptcy?
Is Bankruptcy Right For Me
The following are the main consequences of filing for bankruptcy:
- A low credit score: Your credit score will drop when you file for bankruptcy. This has more impact on people with a high credit score. That means trouble with creditors, landlords, and even some employers. Remember that bankruptcy will stay on your record for as long as 10 years.
- High-interest rates: With a low credit score, the only loans you will have access to will come with a high-interest rate. The terms for paying back the loans will be strict to the point where your cosigner may have to take a loan.
- Cosigner repays the balance: When a person can’t pay back the loan and files for bankruptcy, the cosigner may have to repay the outstanding loan balance.
- Surrendering your personal possessions: You may have to surrender jewelry, paintings, antique furniture, and other important and valuable possessions.
How To Get Out Of Debt
Do I Qualify For Bankruptcy
People with debt less than a specified amount can try the following solutions before settling for bankruptcy:
- Debt consolidation: Find a lender willing to lend you money at a low-interest rate and use that money to repay all your other debts. This leaves you with only one lender to repay.
- Debt snowball: Pay all the small debts first and then tackle the bigger ones next.
- Debt avalanche: Pay the debt with the highest interest first
These are just a few alternatives for filing for bankruptcy. Talk to an experienced lawyer to get additional information.