In 2020, over half a million people filed for bankruptcy, and in 2019 that number was closed to 750,000. That may seem like a lot, but experts say that number could – and perhaps should – be much higher. With approximately 14% of Americans owing more than they own, there are many more people who could benefit from filing for bankruptcy. Many of them don’t because they simply don’t understand the process or how it could help them, and one of the biggest mistakes people make is believing that bankruptcy is only for severe debt.

The truth is that there is no set number that qualifies you for bankruptcy. Rather, your eligibility is determined on your ability to pay off your debts, and whether debts that you have are dischargeable. It also matters whether the people you owe money to are willing to work with you to help you pay off your debt to them.

There are different types of bankruptcies, and proving yourself eligible is never about owing too little – in fact, there is a maximum debt limit for a Chapter 13 bankruptcy — rather, it is about showing that there is either no way for you to pay your debts. For a Chapter 7 bankruptcy, this means passing a means test that compares your income to that of others to determine your ability to pay off the amount that you owe. No matter how much or how little your total debt comes to, if you can prove you can’t pay it off on your income then you will likely qualify. If not, you can apply for a Chapter 13 bankruptcy that will provide you with a payment plan that gives you more time/lower rates in order to help you get your debts paid off.  You’ll also need to show that the type of debt you have qualifies for discharge, as there are some loans and debts that are not eligible, and others that will require you to sell assets.

The first step to getting yourself out of debt is having a good understanding of the options that are available to you. If you are struggling to pay your bills, take the time to speak to a professional. Our bankruptcy attorneys will examine your specific situation and guide you to the solution that works best for you.