Many debtors considering bankruptcy fear that they’re not “broke” enough to file bankruptcy, especially if they don’t have a lot of credit card debt. The truth is that there is no credit card debt minimum to file bankruptcy. In fact, there’s no debt minimum at all. It’s up to the debtor and their attorney to determine if bankruptcy would be a good option for them. Let’s take a look at some of the things you should consider when you’re thinking about bankruptcy:
“The truth is that there is no credit card debt minimum to file bankruptcy.”
Debt Types
What type of debts do you have? Credit cards, student loans, mortgage debt, car loan, or something else? Are those debts typically dischargeable in bankruptcy? For example, credit card debts are considered unsecured debt and are typically dischargeable in Chapter 7 bankruptcy. On the other hand, student loan debt is a lot more difficult to discharge, so someone with mostly student loan debt might not want to file bankruptcy unless they knew for certain that they could get those student loans discharged by passing the Brunner Test.
Employment Status
What is your current employment status? Are you unemployed, underemployed, or making a very good living? Not only will your employment status determine if bankruptcy is a good option but what type of bankruptcy is the best for your situation. For someone who is underemployed, Chapter 7 bankruptcy is often a good option because it can discharge unsecured debts such as a credit card and free up money to pay essential debts such as a mortgage or car loan.
Non-Bankruptcy Options
Bankruptcy is a serious decision, so considering your non-bankruptcy options is wise. Can you handle your debts outside of bankruptcy? For example, can you get on a repayment plan with a creditor or get a consolidation loan to repay several debts at once. Fully exploring your non-bankruptcy options is the best choice for you.
While there is no credit card debt minimum in bankruptcy, you’ll want to consider your total debt load and your entire financial situation to determine if bankruptcy is right for you.
