How did the rumor that you need to have a certain amount of debt to file? The likely answer lies in the fact that there is a maximum amount of debt to be eligible to file for Chapter 13: you can’t have more than $360,475 in unsecured debt, and can’t have more than $1,081,400 in secured debt to be able to qualify for Chapter 13. There are no maximum debt limits for Chapters 7 or 11; the total debt for Chapter 12 [family farmers] cannot be more than $3,792,650. This means that Chapters 7 and 11 are almost always available, regardless of how much debt you owe.

Not requiring a minimum amount of debt to file is a different question from whether you should file with a small amount of debt. I have counseled many clients over the years that, given a relatively small amount debt, it might not make sense for them to file. After all, you can only get a Chapter 7 discharge once every 8 years (although you can usually file Chapter 13 at any time, regardless of prior filings), and shouldn’t “use up” the discharge when you might need it in the future. This analysis differs depending on many factors. For example, a $5,000 judgment that has resulted in a garnishment on someone earning $20,000 a year would be approached very differently from the same judgment on someone earning $100,000 a year.

Rather than asking whether you have too much or too little debt to file, the better question to ask your bankruptcy attorney is whether, given all of your circumstances, bankruptcy is the best option for you. By the time most of my clients come in to see me, they have already tried everything short of filing, and bankruptcy is their best and least expensive option.