Bankruptcy

Do I Have to Have a Minimum Amount of Debt to File for Bankruptcy?

By Cara O'Neill, Attorney
Find out how much debt you must have—if any—to file for bankruptcy.

No. It isn’t necessary to owe a certain amount of debt—or even be insolvent—before filing for bankruptcy. Each individual’s financial situation is different, and the amount of debt that will cause one person financial distress might not be problematic for someone else.

For most people, the ability to repay a creditor depends on the percentage of income needed for basic living expenses. For instance, someone who is unable to work—or is living paycheck to paycheck without a foreseeable increase in income—might not be able to pay back a small debt. For that person, bankruptcy might make sense. (Keep in mind that if you’re “judgment proof,” meaning that you don’t have income or property that a creditor could collect from you, filing for bankruptcy might not be necessary.)

Here are a few factors to consider before filing with minimal debt:

  • How much debt do you owe?
  • Will bankruptcy discharge (wipe out) the type of debt you owe?
  • How long will it take you to repay your debt?
  • Are you facing a lawsuit, wage garnishment, or another type of collection activity?
  • How much will you spend in attorneys’ fees and filing fees?

It’s important to remember that wiping out debt comes with serious long-term consequences. Bankruptcy will affect your credit standing (and remain on your credit report) for up to ten years. Also, some courts frown on filing for bankruptcy when you have minimal debt. A local bankruptcy lawyer can quickly review your case and advise you of your best course of action—often without charging you a consultation fee.

Go to the main bankruptcy FAQ page.

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