Filing Bankruptcy? How Much Do You Have To Owe?

When I was a kid my Grandad used to tell me that if I ate my Lima Beans (Yuck!) they would put hair on my chest! I believed that myth, after all, my Grandad was a good source of information and he could bend a spoon just by looking at it! As you get older though, you learn that if you rely on unchecked myths you can really take a beating in life.

A common myth is the source of a popular question I answer frequently. When they come to my office for their first meeting, to receive their free evaluation, I am regularly asked by my Orlando bankruptcy clients is this: "Are my debts high enough to file for bankruptcy?"

Douglas Jacobs, a California bankruptcy attorney, brings up the question of "Do I qualify to File for Bankruptcy?" in a recent blog. He answers this question with a simple "Yes". I concur, almost everyone qualifies to file bankruptcy of some type. The more pertinent question, in my opinion: "Should I file for bankruptcy?" Only after an experienced bankruptcy lawyer evaluates your complete financial situation, will this question will be answered.

When filing a Chapter 7 bankruptcy, the legal system does not put restrictions on the amount of debt you can owe to your creditors. So, when determining whether a person qualifies to file a Chapter 7 bankruptcy, how much or how little that person owes to their creditors is not relevant. However, there are limitations on the amount of debt you can have when you file a Chapter 13 bankruptcy, but it is not a question of whether you owe enough, but whether you owe too much.

The Chapter 13 trustee in Orlando scrutinizes each case to determine if someone's debts exceed the limitations put forth in the bankruptcy code. As an Orlando bankruptcy lawyer, I know the Chapter 13 trustee file a Motion to Dismiss when a person's debt is over the limitations. The bankruptcy code currently states you cannot owe more than $360,475 in debts to unsecured creditors, like credit cards, medical bills, signature loans, etc. When it comes to secured debt, things like home loans and car loans, the Chapter 13 debt limit is $1,081,400. So in Orlando, if you owe more than these limits, you may see a Motion to Dismiss filed in your Chapter 13 case.

While I'm not real sure of the origin of a lot of bankruptcy myths, tons of them exist and the one about having to owe a certain amount of money to qualify for a Chapter 7 bankruptcy ranks pretty high on the list of common bankruptcy myths I hear everyday as an Orlando bankruptcy lawyer.

With the knowledge you've gained, you now know that you will probably be able to file some type of bankruptcy. Your next step should be to contact an experienced bankruptcy lawyer to review your financial situation. This myth, and many others you may have heard about bankruptcy can be put to rest by a knowledgeable bankruptcy lawyer.