How Much Debt Do You Have to Have to File Chapter 7 Bankruptcy?

Filing bankruptcy does not require that you owe a minimum debt amount, though federal bankruptcy law stipulates that you pass what’s known as the “means test.”

This test compares your average monthly income over the six months preceding filing with the median income for households of your size in your state.

Credit card debt

Credit card debt is often one of the primary factors driving people towards bankruptcy. Credit card debt can quickly grow out of control when compounding interest and late fees come into play; while there are various methods for dealing with large credit card balances, bankruptcy often proves the most successful solution.

Chapter 7 bankruptcy offers one potential solution to clearing away most or all of your credit card debt. However, filing will have an adverse impact on your credit for seven to 10 years; so before making this decision it would be prudent to consult an experienced bankruptcy attorney first.

To qualify for Chapter 7, you will have to pass the “means test.” This calculation compares your monthly expenses with disposable income; then, bankruptcy courts determine if there is enough disposable income available for repayment of creditors.

If you fail the means test, Chapter 13 bankruptcy could still be an option for you. Under this form of protection, a portion of your debts is paid back over three to five years while at the same time eliminating some unsecured debt and converting secured debt into unsecured debt.

Filing bankruptcy will also stop all collection actions taken against you, such as creditor calls, wage garnishment and bank levies. However, this won’t prevent foreclosures or evictions that have already been finalized. If you are struggling with credit card debt, consult a qualified bankruptcy attorney regarding your options.

Medical bills

Medical bills can often be an unexpected and unplanned-for burden. Even with health insurance in place, sudden illness or accident costs may outstrip financial ability to manage them. Furthermore, large medical debt amounts may adversely impact a person’s credit score as well as result in wage garnishment, bank account levies and property tax liens; so it’s wise to explore all available options carefully before filing for bankruptcy in response to medical debt.

Many medical debts may be discharged under Chapter 7 bankruptcy. However, there are limits to its power: for example a debtor may only discharge up to $394,725 of unsecured debt and $1,184,200 in secured debt (credit card debt, personal loans and some rent payments are all considered unsecured; mortgages and car loans count as secured debt). Furthermore, recent income taxes cannot be discharged nor can debts accrued through child support obligations, embezzlement or fraud be written off as being indebtedness or fraud either.

If you have overwhelming medical debt that you are unable to repay, bankruptcy may be your only recourse. But before considering filing, it would be prudent to explore nonbankruptcy debt relief solutions as this could protect both your credit rating and save you money in the long run.

If your assets could be at stake under Chapter 7, or your income exceeds its eligibility criteria, Chapter 13 bankruptcy might be the better choice. Under this form of debt reorganization, a payment plan is proposed that allows creditors to be paid over an 3-5 year period; it must include repayment of secured debts as well as certain unsecured ones like medical debts.

Unsecured loans

Individual bankruptcy cases filed by individuals generally involve unsecured debts such as credit card and personal loan debts that don’t require collateral for security, though creditors have recourse should a borrower default on his or her loan agreement. When filing for bankruptcy protection, courts appoint an impartial trustee who oversees and administers each case while liquidating nonexempt assets; then reports back to creditors with claims.

Unsecured loans can be used for many different purposes, such as paying medical bills, financing home renovations or consolidating debt. Lenders generally offer competitive interest rates and flexible repayment schedules, making these loans appealing to borrowers looking for additional funding options. Before applying for one of these loans, however, borrowers should first explore all possible solutions first before making their decision.

Borrowers applying for unsecured loans should possess both good credit and sufficient income to afford the monthly repayments, knowing that late payments could damage their score and make qualifying for future loans harder.

An individual with poor credit can still secure an unsecured loan; however, lenders will likely charge higher interest rates to reflect the higher risk involved and may request a co-signer as security in case the borrower defaults.

Debtors with large amounts of dischargeable debt such as student loans or income taxes may file Chapter 7. However, before the court approves their conversion from Chapter 7 to Chapter 13, their income must show they can afford a repayment plan under Chapter 13 before converting; there are no conversion fees; however any associated filing fees must still be paid by them.


No minimum debt requirement exists in order to be eligible for Chapter 7 bankruptcy; however, you must pass the means test and have sufficient disposable income available to repay eligible debts. If this test fails, however, filing Chapter 13 instead may be necessary.

Chapter 7 bankruptcy will stop all collection actions by creditors – lawsuits and wage garnishments alike. An automatic stay that follows filing will last throughout your case until a discharge order from bankruptcy court erases your debts. Occasionally a creditor can petition to have this stay lifted based on grounds such as breach of contract.

Some types of debt cannot be discharged in Chapter 7 bankruptcy, including secured loans such as mortgages and car loans. If you fall behind on payments for these types of debt, creditors can ask the court to lift its stay order against you and pursue legal action, possibly leading to your property becoming worthless. You have two options when this occurs – either redeem or reaffirm the loan agreement in order to keep it while continuing making payments per original contract terms, or they could pursue legal action against you to recover their property and pursue legal action against them against creditors who could pursue legal action against you as a debtor; otherwise legal action could ensue against you or legal action taken against you can lead to your property becoming worthless!

Filing for Chapter 7 bankruptcy can have lasting repercussions, including impactful long-term effects. Filing can impair your ability to obtain credit and make major purchases in the future and will remain on your credit report for 10 years. Before considering filing, it is worthwhile considering alternatives like debt management programs – these programs can lower interest rates while making manageable monthly payments that fit within your budget and can even help rebuild your credit.

Student loans

Filing for bankruptcy allows you to erase or “discharge” certain debts, including credit card balances, medical bills, personal loans and unpaid rent and utility bills. Unfortunately, however, bankruptcy does not automatically wipe out student loans; to have your student loans discharged you must demonstrate undue hardship due to repaying them which requires meeting a higher standard than what is needed when discharging other consumer debts like credit card debt or utility bills; additionally this process can leave your credit report marked for up to 10 years post discharge.

Experienced bankruptcy lawyers can be essential when applying for student loan discharge, as they will help present your case before the court and find programs to make paying back loans easier, such as income-driven repayment plans that cap monthly payments at a percentage of your discretionary income, with repayment terms stretching up to 25 years.

As well as showing undue hardship, Chapter 7 bankruptcy requires you to pass the means test and have sufficient assets that can be liquidated to pay your creditors. The process typically lasts four to six months; typically filing fees and attorney’s fees must also be paid when filing this type of bankruptcy; alternatively you could try finding a pro bono lawyer who would take on your case for free or at a reduced fee – an ideal solution if you have access to enough financial resources; otherwise alternative methods of debt clearing should probably be sought – such as debt management programs or