Thursday, March 16, 2017

Do I Have To Have A Certain Amount Of Debt To File For Bankruptcy?

When you are not able to pay all of your bills each month it does not matter if you are short by just a few dollars or by thousands, the end result is the same and that is that you cannot make ends meet. There are a few things you can do in this situation; you can pick certain bills over others to pay, you can take out a loan to consolidate your debt, you can ask your creditors to forgive part of the debt, you can try to modify your mortgage, or you can file for bankruptcy. But what you should not do is ignore the problem, because ignoring your finances will not get them healthy again. If bankruptcy is your choice you probably have a lot of questions about how the process works, and what will be required from you to file a case.

One of the most frequently asked questions about what is required to file a bankruptcy case is whether a certain amount of debt is required. The answer is no! But that does not mean your total debt load is not considered. Here is a brief overview of how it works:

         If you do not have enough money to pay your bills each month, you qualify for bankruptcy.
         The type of case you are allowed to file depends on the amount of money you make, and how that relates to the amount of secured debt you are servicing.
         A complex calculation has to be performed to determine the ratio of disposable income you have, as it relates to the total of your monthly secured debt payments.
         If the ratio falls at a certain threshold figure, you will be allowed to file a Chapter 7 and eliminate all of your unsecured debt. But if the ratio shows you have money at your disposal each month to pay even a part of your unsecured debts after meeting all of your secured obligations, you will be required to file a Chapter 13.

The differences between the two types of cases are many, the most important being the requirement to pay back a portion of unsecured debt rather than have it wiped out in its entirety. Another difference is that a Chapter 7 takes a few short months to complete, while a Chapter 13 can last up to 5 years. Both types of cases are beneficial though, because upon filing a case under either chapter, your creditors are prohibited from contacting you. This can give you a break from collection calls and letters, and can also put a stop to a wage garnishment or a pending foreclosure. If you need help getting back on track with your bills, give our office a call. We will let you know what to expect and can make the determination as to which chapter of bankruptcy you qualify to file.

For more information about how to fix your finances, call us today or reach us online at We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

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