bankruptcy/debt

There is no threshhold amount. Whether t do it or not depends on the relative benefit you will realize if you do, compared to the costs, burdens and risks. Every situation is unique. There are different kinds of bankruptcy proceedings and they do different things.

We have a client right now who is filing bankruptcy to stop a foreclosure sale on her home. Other than her mortgage, she has very little debt, has a steady income and is able to make her mortgage payments. Her loan servicer has made mistakes, is unreasonable, and while promising to work with her, instead has moved her down the road to foreclosure sale. In her situation, Chapter13 will allow her to stop the sale and to propose a repayment plan t get her mortgage back on track. If the objective is to sort out a problem with a foreclosure, Chapter 13 is the only bankruptcy prceeding that is of any potential use.

Chapter 7 may be a solution for people with a lot of unsecured debt (credit card etc). However, there is an income limit for Chapter 7, and if a Petitioner has assets, they may be at risk. If someone has $25000 or more in unsecured debt and qualifies for Chapter 7, it may well be the best solution. If someone has less debt than that, it is a case by case analysis of what makes sense.