Many people think that they must have a ton of debt in order to file for bankruptcy. This is not true. For the majority of individuals and couples filing for bankruptcy, there is no minimum amount of debt that is required in order to file. You can have as little as $1,000 of debt or as much as $100,000 of debt and you will be able to file for bankruptcy. The Bankruptcy Code does not base filing eligibility on your debt amount. Rather, whether you can file for bankruptcy is based on a legal test called the "Means Test," which is based on your household income and household size. So, as long as you pass theMeans Test, you can file for bankruptcy and wipe out all of your debt, no matter how small or how big. This is the general rule for filing a
chapter 7 bankruptcy.
The rules for filing for chapter 13 bankruptcy are a little different than for filing chapter 7 bankruptcy. Similar to a chapter 7, there is no minimum amount of debt that is needed to file. However, there IS a cap on the maximum amount of debt you can have while you file chapter 13 bankruptcy. The cap amount is different for your unsecured debts, like credit cards and medical bills, and for your secured debts, like your mortgage and car loans. Currently, the debt limit for unsecured debt is $383,175, and the limit for secured debt is $1,149,525. The debt limits are updated and changed every 3 years. The last change was in 2013, so the next debt limit adjustment will take place in 2016. WIth the increase in debt limits in 2013, now, even more people will be able to file for chapter 13 bankruptcy.
Before you decide if you should file for bankruptcy, whether chapter 7 or chapter 13, you should speak with an experienced bankruptcy attorney. The attorney will be able to explain the differences to you and advise which chapter will be more beneficial for you and your family. We are trusted bankruptcy attorneys who have filed hundred of cases, with every chapter 7 bankruptcy receiving a successful discharge. Atlantis Law has a Rancho Cucamonga office and a Riverside office, and we can meet with you for a
free consultation to discuss your options.
Contact us today for more information and to schedule your consultation.