Personal Bankruptcy - Minimum Amount of Debt Needed to File For Bankruptcy

If you're in debt and over your head then maybe you've thought about filing for bankruptcy as an option. Lots of people come to my office with the same question - "how much debt is enough to file?" The answer is stunningly simple.

If you can't pay your bills and won't be able to do so without a radical change in your financial situation, then you need to do something. Fast. Bankruptcy may be an option, but it's certainly not the only one.

There's no minimum amount that you need to owe in order to file for Chapter 7 or Chapter 13, but there is a rule of reason that applies. If you don't owe significantly more than the legal fees to file a case then it doesn't make sense to file at all.

For example, let's say you've got $3,500 in credit card debt and nothing else. You're unemployed and can't make the payments. Sounds like a slam dunk for a Chapter 7 bankruptcy, right?

Maybe not. Consider this: a lawyer may charge you a decent portion of that amount. Let's say you find an experienced, reliable attorney who's going to do the work for $2,000. Why hire him or her when you could easily use that money to knock out over 50% of the total debt load?

In this illustration, it's a bad idea to file for bankruptcy. You could take the $2,000 and put it towards your debt load, bringing it down to a total of $1,500 - something that might be more easily managed.

Of course, this assumes you're going to hire a lawyer for your case. Though it may be tempting to think that you should go the "do it yourself" route when dealing with a small amount of debt, consider the fact that bankruptcy is a highly specialized field of law. Most lawyers work for years on learning the basics, and the law is a complex and ever-changing beast. Even with a small amount of debt, your case could be more complex than you realize.

And if you mess it up... well, that just spells a lot more in the way of trouble.

Want more information about filing for bankruptcy? I'd like to invite you to visit http://www.NewYorkBankruptcyHelp.com to download my free report and learn more.

Jay S. Fleischman is a New York bankruptcy lawyer and New York State co-chairman for the National Association of Consumer Bankruptcy Attorneys. He is also the co-founder and past President of the Bankruptcy Law Network, where he writes on consumer bankruptcy and related issues.