Should I File Bankruptcy for $20,000?

Should I File Bankruptcy for $20,000?

Should I file bankruptcy for $20,000?

I believe it is a matter of degree. Sometimes I am asked, “I have $20,000 in debt (or $10,000 or $100,000 or whatever).  Can I file bankruptcy?  And if I can, should I file bankruptcy?”  The answer to can you file bankruptcy is yes. There is no minimum amount of debt required to file bankruptcy.  If you are otherwise qualified, you can file bankruptcy.

Whether you should file is more of a judgment call.  Just because you can file does not necessarily mean you should.  I have clients with little debt that choose to file bankruptcy for strategic reasons or because their income level is just so low that they just can’t pay back $10,000 in debt.  On the other end of the spectrum, I meet people who have over $100,000 in credit card debt, taxes or other debt, but do not file for various reasons;  maybe they actually have the income to pay it off or will lose assets if they file bankruptcy.

And I meet with clients who  could go either way.  They can file and get a good result, or maybe they can pay back the debt in full or in part with a Chapter 13 bankruptcy.  It then it depends on whether they can pay back the debt in a few years, or whether it will take many many years of minimum payments and it depends on their short and long term goals.   The decision of whether to file bankruptcy is based on a complete analysis of each individual’s situation.  Sometimes bankruptcy is a silver bullet and sometimes it’s not.

For those having financial problems and wondering what to do, the best course of action you can take is to gather information.  Talk to a financial advisor, a bankruptcy attorney and any other professionals that may be relevant to your situation.  At the very least, you want to make an informed decision.

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