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Is there a dollar amount that needs to be filed for Chapter 7?

There is no specific dollar amount for filing Chapter 7 bankruptcy. For some people, $10,000 is enough to put them over the edge to the point where they need to file. For other people, it could be $25,000 or $50,000 or more. You have to look at each case in its own light.

What I try to advise clients is this: if you feel you can bail yourself out of debt within the next six months, then do not file for Chapter 7 bankruptcy. If, on the other hand, if you feel after six months of trying to pay off your debt, you are still going to be in the same position or very close to the same position, then you should file for bankruptcy because you’ not going to be able to get out of it on your own.

People make mistakes prior to filing. Some people money that they have on account for 401(k)s and pensions and profit-sharing in an effort to eliminate unsecured debt only to realize that they don’t have enough money in those accounts to pay off the debt and they just lost all of their retirement that they could have If they had filed for Chapter 7 initially.

Before you make any move on transferring property, borrowing property, taking property out of retirement or any other issue financially, you want to consult with an experienced bankruptcy attorney first. You might learn that something you are just about to do is going to harm you. For example, some people transfer property out of their name and then quickly file for Chapter 7 bankruptcy. Well, not only does this have to be disclosed, it’s fraudulent and the trustee can use the trustee’s powers to undo that transaction. So let’s say you transferred a vehicle that was paid off and worth $10,000 to your brother for no consideration. And then you file Chapter 7 and it gets uncovered by the trustee. The trustee can then take that property through a court order from your brother, sell it, pay your exemption amount and used the rest of the proceeds to pay your creditors.

So each case is different. Sometimes a little bit and that is enough to put somebody over the edge. Sometimes it takes a lot. But whatever the situation, consult with a bankruptcy attorney typically for free before you make any rash decisions and before you transfer any property out of your name or intimidate bank accounts that could have been used after filing.

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