No one wants to file for bankruptcy. However, in many cases, filing for bankruptcy is the best option available for people swimming in unmanageable debt or facing foreclosure. One of the basic questions someone contemplating bankruptcy has is, “how much debt should I have before filing for bankruptcy?” While there is no minimum amount of debt required, our experienced attorneys at The Bankruptcy Group understand that the answer varies depending on an individual’s circumstances. In the following article, our Roseville, CA bankruptcy attorney examines the amount and type of debt that could make filing for bankruptcy a practical decision.
How Do I Decide if I Have Enough Debt to File For Bankruptcy in California?
How a person is negatively impacted by the amount of debt they have will depend on many factors, including their income, their household size, and the type of bills they have. If you are receiving calls because you are behind on one credit card bill for $2,000, then you probably do not have enough debt for bankruptcy to be a good choice. However, if you are getting calls from three or four credit card companies and there is the threat of a lawsuit, or if a lawsuit has been filed against you, then filing for bankruptcy becomes a viable option.
Ultimately, deciding whether your debt is high enough to justify filing for bankruptcy is based on your situation. $10,000 of debt is substantially different for someone making $35,000 a year than for an induvial with a six-digit income. However, there are several warnings that a person should know that are indications that their debt is becoming unmanageable and that bankruptcy should be considered. No matter the amount of debt you have, consider the following questions.
Are you only paying the minimum of your credit card bills?
If this is the case, then you are not making any headway in decreasing your debt. If you find yourself using credit cards to pay other credit cards or are transferring entire balances just to get a lower interest rate, then you should contact our California bankruptcy attorney. This is especially the case if your credit cards have been maxed out for years.
Are You Missing Monthly Payments?
When you find yourself missing payment deadlines or are purposefully allowing some bills to wait until the next month, then it is likely that you are unable to afford your monthly expenses. If these expenses include unsecured debts that are increasing monthly due to interest, then filing for bankruptcy could give you a fresh start. When you have fallen behind on utility bills, bankruptcy could help you avoid a shutoff of services.
Are You Living Paycheck to Paycheck?
If you are living paycheck to paycheck and believe your debt is beginning to overwhelm you, the best thing to do is contact our knowledgeable California bankruptcy lawyer to discuss your situation confidentially.
Does the Amount of Debt Affect Whether to File for Chapter 7 or Chapter 13 in California?
The two most common types of consumer bankruptcy are Chapter 7 and Chapter 13. Both provide the debtor with different benefits. However, neither is necessarily determined by the amount of debt an individual has. However, it is essential to note that there is a maximum amount of debt a person can have when filing for Chapter 13. As of April 1, 2019, there is an unsecured debt limit of $419,275 and a secured debt limit of $1,257.850. In Chapter 7, there is no debt limit.
In most cases, whether you file for Chapter 7 or Chapter 13 will be determined by your income and the type of debt you have, rather than the amount. In some cases, such as home foreclosure, you could have no other debt yet still need to file for Chapter 13 to save your home. Our sympathetic California bankruptcy attorneys will thoroughly review the amount of your debt, your income, and your assets to help determine which type of bankruptcy is best for you.
Types of Debt for California Bankruptcy Cases
In some cases, the amount of debt might be overwhelming, but it is the wrong type of debt for bankruptcy. Debt in bankruptcy is broadly broken down into two categories – dischargeable and nondischargeable. Dischargeable debt includes the vast majority of debt a person accumulates, including credit card bills, medical expenses, and personal loans. These types of debts can be eliminated in either Chapter 7 of Chapter 13.
However, nondischargeable debts survive bankruptcy and cannot be eliminated. These types of debts include alimony, child support, certain tax obligations, criminal restitution, and, typically, most student loans except in exceedingly rare cases.
However, this type of debt does not preclude you from filing bankruptcy. In some cases, you could pay your nondischargeable debt through a Chapter 13 bankruptcy plan. The amount of debt you have will determine if you can propose a feasible plan. Our California bankruptcy attorney will work with the amount and type of debt you have so we can present you with the best available options.
If You Have Any Doubts About Filing for Bankruptcy, Contact Our California Bankruptcy Attorney Today
If your debt has you contemplating bankruptcy, then you likely have enough debt to benefit from filing for bankruptcy. Our Roseville bankruptcy attorneys are dedicated to helping people suffering from financial stress and will help you decide if the amount of your debt requires filing for bankruptcy. Call The Bankruptcy Group at 1-800-920-5351 to schedule a free consultation to review your situation.