If you’re overwhelmed with debt and struggling to pay your bills, there’s a good chance the idea of bankruptcy has crossed your mind. Bankruptcy is something that everybody has heard of, but few understand well, and you’re not alone if you’ve told yourself that it’s only for people who are in financial straits that are far more dire than yours.

The truth is that there is no specific threshold for how much you need to owe to qualify for bankruptcy or even a ratio of debt to income or a benchmark for how long you have been in debt. Rather, the time to file is determined by a combination of factors that include:

• Your ability (or inability) to pay your creditors while still affording basic living expenses
• Whether your existing creditors are willing to work with you on a payment plan or have moved to collection actions
• The type of debt that you carry and whether it can be discharged in a bankruptcy
• Any other circumstances that may apply, including illness, inability to work, etc.

Though there are no specific criteria for being in enough debt, there is a limitation to how much debt you can carry and have discharged in bankruptcy. Debtors cannot qualify for Chapter 13 bankruptcy if they owe more than $465,275 in unsecured debts or $1,395,875 in secured debts in 2022.

Though there is no definition for the level at which you qualify to file for bankruptcy, there are rules regarding the kind of bankruptcy that you are eligible for. Chapter 7 bankruptcy, which discharges most debt and wipes the filer’s financial slate clean, is only available to those whose average income over the previous six months falls below the median income for households of the same size in their state. Those whose earnings exceed that amount will still be able to file for bankruptcy but will be required to file under Chapter 13, which reorganizes debts rather than erasing them.

There are so many ways that a person can fall behind on their bills, and once there it can be extremely difficult to recover. If you are struggling with debt and being pursued by bill collectors, filing for bankruptcy may be the right answer for you. For help understanding your options, contact our experienced bankruptcy attorneys today.