Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

How Much Debt Do I Need to File Bankruptcy?

A common question raised by people who talk to a New York bankruptcy lawyer is “Do I have enough debt to file bankruptcy?” It’s a sensible question to ask because we tend to think that the law imposes minimum thresholds and other requirements in many circumstances, like speed limits. For a straight liquidation, chapter 7 bankruptcy, however, there is no minimum debt level that someone must have to file. The more pertinent question is whether debtors have enough debts to make filing worth their while, but that’s a factual matter that must be discussed in an attorney consultation. There is no maximum debt level for chapter 7.

Obviously, people with small debts should probably not file bankruptcy. Negotiating with lenders would probably be more productive. The legal fees and other costs might reduce the value of filing as well.

Debtors do need to be aware that if their incomes are high, they might not be able to file in chapter 7 due to the “means test,” which presumes that debtors whose incomes are above the median family income for their state are filing abusively. In New York, the median income for one person is $57,137, and it increases with each additional family member. High-income debtors can overcome the presumption that their chapter 7 filing is abusive by proving their situation merits special circumstances. Otherwise, they must file in chapter 13 or chapter 11.

Chapter 13 also doesn’t have a minimum debt threshold, but it does have a maximum debt limit for unsecured and secured debts. These limits are very high, and most people who file bankruptcy never have to worry about them. Currently, for unsecured debts, the limit is $394,725, and for secured debts, the limit is $1,184,200. People whose debts exceed these levels will have to file in either chapter 7 or chapter 11, which has no debt limits either.

The Bankruptcy Code gives debtors a few options for fixing their financial straits. Choosing the right one, however, is best done with the help of an experienced New York bankruptcy lawyer.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

What to Do If You Are Moving While in Bankruptcy

Americans are a mobile people, so it’s not unheard of for them to move while their bankruptcy cases are still pending. Fortunately, bankruptcy is a federal matter so it’s fairly easy to transfer a case from one bankruptcy court to another if the move is a significant distance. Whether yours is a New York bankruptcy

Read More »

What Chapter Is Best for a New York Business Bankruptcy?

“Business bankruptcy” isn’t a legal term as there’s no designated chapter for businesses or businesspeople to file bankruptcy in. Thus, the correct question is which chapter is best for businesses and their principals to file in. The answer depends on the structure of the business and the principals’ goals for running it. For sole proprietorships

Read More »

It’s Not Always Worthwhile to Pay Off a Chapter 13 Plan Early

For people who’ve filed chapter 13 bankruptcy attorney Brooklyn NY ,  the question of whether to pay off the repayment plan early sometimes arises. It’s a tempting idea. Repayment plans don’t leave much discretionary income for debtors, and escaping the process can feel like a reward in itself. However, there are a few reasons to

Read More »

Why Convert a Chapter 13 Bankruptcy to Chapter 7?

Most New York bankruptcies are filed in chapter 7 because debtors have mainly unsecured consumer debts and don’t have the income for a chapter 13 repayment plan to be feasible. Others, though, prefer the benefits of chapter 13, but once they’re partway into it, they find that chapter 7 might be a better fit after

Read More »

What Is a ‘Proof of Claim’?

The term “proof of claim” comes up in New York bankruptcy sometimes, and debtors often want to know what it means. For creditors, receiving them during a debtor’s bankruptcy means they need to know how to complete them. So what are they? A proof of claim is a document a creditor in a bankruptcy files

Read More »

How to Deal With Creditors Who Violate the Discharge Injunction

Discharge of debts is one of the primary goals of a New York bankruptcy, particularly chapter 7 filings. Covered in Section 524 of the Bankruptcy Code, the full name of the term is “discharge injunction,” which means it legally forbids anyone (creditors) from enforcing claims for payment against the debtor. That does not, however, mean

Read More »
Scroll to Top