How much debt is needed to file for bankruptcy?

No matter how hard a person may try to pay bills on time, and in their full amount, debt can still creep up on someone and completely overwhelm them. Generally in the form of an unexpected life event such as a car accident or an extended stay in a hospital. Other times it can be from events in a person’s life like a divorce, or unplanned expenses. When a person reaches the point in their life where the debt is overbearing, and the phone calls from bill collectors becomes too much, bankruptcy offers a sense or relief and way out from the growing mountain of debt. The question becomes, how much debt is needed to file for bankruptcy?

To understand how much debt is needed to file for bankruptcy we must first understand the reason why someone would file for bankruptcy. Bankruptcy offers a number of benefits, including the ability to erase completely certain types of debts. So when a person is faced with an overwhelming number of bills, bankruptcy becomes a viable option. One key benefit to filing for bankruptcy is the granting of an “automatic stay”. An automatic stay halts collections activity from all creditors as soon as the bankruptcy paperwork has been filed. That means that all civil lawsuits and forms of communication from collection agencies and creditors stops immediately. Your automatic stay will also stop wage garnishment allowing you a chance to make a fresh start financially.

Now depending on what type of bankruptcy you file for - Chapter 7 or Chapter 13 - certain types of debts can be completely eliminated. When a person files for Chapter 7 Bankruptcy one might be able to eliminate medical bills, credit card debts, personal loan debts, civil judgments, utility bills, and any past-due rent or mortgage payments.

Commonly discharged debts for Chapter 13 bankruptcy include personal loans, credit card debts, medical bills, lawsuit judgements, and some income tax obligations. While both options have their advantages, it is important to work with an experienced bankruptcy attorney who can help you determine which type of bankruptcy is appropriate for your specific situation.

Now that we have an understanding of how bankruptcy works, we can better understand the question of how much debt is needed to file for bankruptcy. Because each person’s financial situation is unique, it really depends on what type of assets or income sources a person has. It is important to note that there is a law in place to enforce the amount of debt a person can eliminate in Chapter 13 bankruptcy. That maximum a person is allowed in unsecured debt when filing for Chapter 13 bankruptcy is $419,275, and $1,257,850 in secured debt.

About The Law Offices of Nicholas J Del Pizzo

The burden of overwhelming debt can be too much for anyone to handle. That is where we come in to help. At The Law Offices of Nicholas J Del Pizzo in Baltimore, our knowledge of an experience with bankruptcy law can help you get the fresh start you need by wiping out your debts, reorganizing your finances, or saving your home. Schedule your free initial consultation with us today.

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