How much debt do i need to file bankruptcy?

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Filing for bankruptcy is a significant decision that individuals facing overwhelming debt may consider. However, determining the amount of debt necessary to file for bankruptcy can be a complex matter. In this article, we will explore the factors that influence the decision to file for bankruptcy and discuss the thresholds that need to be met.

Understanding Bankruptcy

Before delving into the specific debt requirements for filing bankruptcy, it is important to have a basic understanding of the concept. Bankruptcy is a legal process that allows individuals or businesses to seek relief from their debts when they are unable to repay them. It provides a fresh start by eliminating or reorganizing debts under the supervision of a bankruptcy court.

Types of Bankruptcy

There are different types of bankruptcy, but the two most common for individuals are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy involves the liquidation of assets to repay creditors, while Chapter 13 bankruptcy involves the creation of a repayment plan over a specified period of time.

Debt Thresholds for Chapter 7 Bankruptcy

Means Test: To qualify for Chapter 7 bankruptcy, individuals must pass the means test. This test compares their income to the median income in their state. If their income is below the median, they automatically qualify. If their income is above the median, further calculations are done to determine eligibility based on disposable income and debt-to-income ratios.

Unsecured Debt: Chapter 7 bankruptcy primarily deals with unsecured debts, such as credit card debt, medical bills, and personal loans. There is no specific minimum or maximum debt amount required to file for Chapter 7 bankruptcy. However, it is important to note that if an individual has significant assets, they may be subject to liquidation to repay creditors.

Debt Thresholds for Chapter 13 Bankruptcy

Secured and Unsecured Debt: Chapter 13 bankruptcy allows individuals to create a repayment plan to pay off their debts over a period of three to five years. There are specific debt limits for filing Chapter 13 bankruptcy. As of 2021, an individual’s unsecured debts must be less than $419,275, and secured debts must be less than $1,257,850 to qualify.

Considering Other Factors

While the debt thresholds mentioned above are important considerations, it is essential to evaluate other factors before deciding to file for bankruptcy. These factors include:

Income Stability: If an individual’s income is expected to increase significantly in the near future, it may be wise to delay filing for bankruptcy.

Non-Dischargeable Debts: Certain debts, such as student loans and child support payments, are generally not dischargeable in bankruptcy. It is important to consider these obligations when assessing the overall impact of filing for bankruptcy.

Asset Protection: Depending on the type of bankruptcy filed, individuals may be required to liquidate certain assets to repay creditors. It is crucial to understand the potential impact on personal property before proceeding.


The amount of debt required to file for bankruptcy varies depending on the type of bankruptcy and individual circumstances. While there are no specific minimum or maximum debt thresholds for Chapter 7 bankruptcy, Chapter 13 bankruptcy has specific limits for secured and unsecured debts. It is important to consult with a bankruptcy attorney to evaluate your unique financial situation and determine the best course of action.


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– Internal Revenue Service: