How Much Debt Do I Have to Be in to File Chapter 7

How to file chapter 7 in Massachusetts

When to File Chapter 7

When you are considering Chapter 7 bankruptcy, you are probably wondering if you are in enough debt that it makes sense to file for a liquidation bankruptcy. You also might be wondering about your eligibility for Chapter 7 bankruptcy, and whether the amount of debt you owe can make you eligible to have your debts discharged through this bankruptcy chapter. There is no objectively right answer as to the specific amount of debt you should owe when you begin to consider Chapter 7 bankruptcy; there are a variety of issues that you should take into consideration, however, when determining whether you have an amount of debt that makes it appropriate to file for Chapter 7 bankruptcy.

Chapter 7 Bankruptcy Has No Specific Debt Requirements or Maximum Limits

While some types of bankruptcy (e.g., Chapter 13 bankruptcy) prevent a consumer from filing if they have too much debt, there are no maximum limits on debt when it comes to filing for Chapter 7 bankruptcy, and there are no debt requirements. You may be eligible to file for Chapter 7 bankruptcy whether you owe debt in the single digits or hundreds of thousands of dollars. The question, however, is often whether you have so much debt that it makes sense to file for bankruptcy.

Generally speaking, if you have another option for paying off your debt, even if it will take some time, bankruptcy might not be the best course of action. However, if you are unemployed, or if your income is not enough to allow you to reasonably plan to pay off the debt you owe at any point in the near future, then a Chapter 7 liquidation bankruptcy in Massachusetts may be the right choice for you.

You May Not Qualify for Chapter 7 Bankruptcy

Regardless of the amount of debt you owe, you may not qualify for Chapter 7 bankruptcy—even if you have more debt than you can reasonably imagine having the means to repay. In order to qualify for Chapter 7 bankruptcy, you will need to pass what is known as the “means test.” The means test requires an examination of your assets and your income, and if you earn too much money, for example, you will be considered ineligible for Chapter 7 bankruptcy under the U.S. Bankruptcy Code. In such a case, however, you may still be eligible for Chapter 13 bankruptcy. Yet if you have more than the permitted secured or unsecured debt, you may need to consider alternate options.

Determine Whether Your Debts are Dischargeable

Whether or not you have so much debt and so little income or assets that it makes sense to file for Chapter 7 bankruptcy, you should only do so, presuming you are eligible, if your debts are dischargeable. Not all kinds of debts are dischargeable in a consumer bankruptcy case, so you should check with an experienced Massachusetts bankruptcy attorney before you move forward with a Chapter 7 bankruptcy case.

Contact a Bankruptcy Attorney in Massachusetts

Determining whether you have an amount of debt that makes you eligible for bankruptcy and for which it makes sense to file can be a difficult task. An experienced Massachusetts bankruptcy lawyer can help you to determine whether Chapter 7 bankruptcy is right for you. Contact the Law Office of Rachel M. Matos today.

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