Q: What type of debt must i have to file chapter 7?

A: There is no requirement that you owe a minimum amount that you owe or type of debt that you must have to file for bankruptcy. Also, there is no magic dollar amount or type of debt that says, you should file bankruptcy. There are many factors that need to be considered when making the decision to file for relief under chapter 7 or chapter 13 of the bankruptcy code. Some of those factors are:

1) total amount of unsecured debt such as credit card debt, medical bills, personal loans, old utility bills, etc.;

2) total amount of secured debt such as auto loans, house mortgages and loans that have other items as collateral;

3) for loans made to purchase autos and other personal property in which the collateral are the purchased items, did you purchase the auto more or less than 2.5 years ago or did your purchase other personal property more or less than one year ago;

4) what is the interest rate on you secured loans and would a reduction to around 5.0% help you significantly;

5) for the tax debt is the debt dischargeable in a chapter 7 or chapter 13, and if not, would discharging the penalties in a chapter 13 and stopping the interest from running on the tax be a significant savings;

6) your projected income and expenses and you means test income and expenses, which considers your average income over the past 6 months;

7) what assets do you own that are exempt and what assets that you own that are not exempt;

8) is your income subject to being garnished by a judgment creditor if you decide not to file; and

9) your current credit score, which if it is already extremely low now, your score could be helped by filing and doing the right things to rebuild your credit after entry of the discharge order in your case.

The only way to find out if bankruptcy right for you is to take advantage of a free initial consultation with an experienced bankruptcy attorney that handles chapter 7 and chapter 13 cases even if you think you need to file under chapter 7. Become educated on all the issues involved and related to your current economic situation, find out the advantages and disadvantages for filing under each chapter and use an attorney that can help you make the right decision for you. Most bankruptcy attorneys will meet with you at no charge for the initial appointment. You can use the Justia "Find a Lawyer" link at the top of this page to search for an attorney.