There is no limit to the amount of the debt you can discharge in a Chapter 7 bankruptcy. Nor is there a minimum threshold of debt that you must have in order to qualify for a chapter 7 bankruptcy.
So for example, you can technically file and receive a Chapter 7 bankruptcy discharge if you have $1,000 in debt or $1,000,000,000 in debt.
However, in the case that you have too little in debt, it might not make sense to file an entire Chapter 7 bankruptcy to discharge that debt. Since a Chapter 7 bankruptcy can be filed once every eight years it will not make practical sense to use up this lifeline for too little in debt. Although, what counts as “too little” in debt is specific to each individual, usually Debtor’s choose not to evoke the Bankruptcy protections when they have less than $7,000 in debt.
On the other hand, if your debt is very high, usually in the case when it is over $100,000, the chapter 7 bankruptcy Trustee as well as the United States Trustee will scrutinize your case in more detail. When the debts are too high the bankruptcy Court wants to make sure that the debts were not incurred through fraud or without the intention to pay back the debt when it was incurred. Although the Bankruptcy Court might scrutinize your case if you have too much in debt, it doesn’t mean that you will not get the bankruptcy protection. This is why it is important to speak to a bankruptcy attorney prior to filing your case.
It is also important to keep in mind that not all types of debt will be dischargeable in a bankruptcy. For example, Student loans, Child or Alimony support payments, Certain Taxes, Damages incurred when driving under the influence, etc.
If you have questions about the amount of your debt or any questions regarding your bankruptcy please call Reganyan Law Firm for a free consultation at (818) 649-0879 and within 15 minutes you’ll know if you qualify for a fresh financial start through the bankruptcy process.