This will be a short one today. This week it seemed that I had many consults with clients with what I consider a small amount of debt. While I understand that to them the amount is beyond their current ability to pay and is large, in a bankruptcy context it can disqualify them from utilizing its procedures. Technically you can file a Chapter 7 bankruptcy with any amount of debt. I can help a client discharge $55,000 or it can be $1.00; it doesn't really matter.
What does matter is in the counsel you receive from a knowledgeable bankruptcy attorney; they should help you decide whether a filing makes sense both in the total costs to the client and the overall scheme of the clients financial life. In my practice I typically set a floor of around $10,000.00 for a single person or client. There are always exceptions to this and I've helped file for clients with much lower debt loads, so it always 'depends'. But in general if bankruptcy costs my client $900 or $1200 dollars and they only had $2000.00 in debt then that wouldn't make a lot of sense and a good lawyer would typically reject a case like this. Basically it comes down to a cost benefit analysis that you should discuss with your bankruptcy lawyer.
Could a client discharge one dollar; you bet. Should they? Probably not. Talk to a lawyer and see what might be right for you. Our office can always give you some clear paths and understanding of the process to help you make a decision.
Be well
$1.00 in debt: How much debt is too little for a Chapter 7 filing
July 16, 2009
