How Much Debt Do You Need to File Bankruptcy in Arizona?

A lot of people think that you must owe a certain amount of money to file bankruptcy. The truth is, there is no set amount. Every case is different. When the court looks to see if you qualify for a Chapter 7 bankruptcy, they look at two main things. First, they want to see how much your total debt is. Then they look to see what your disposable income is each month. If you owe at least three times what your disposable income is, there’s a good chance your petition will be approved. The best thing to do is call and speak with an Arizona bankruptcy lawyer. They’ll review your credit report and any other paperwork you have regarding your debts. They’ll also look at your tax returns. If they feel you may pass the court’s means test, they’ll let you know. Then you can decide if you want to move forward with your petition.

What Chapter Bankruptcy Are You Filing?

The rules are a little different depending on which chapter you are filing. People who don’t qualify for a Chapter 7 may qualify for a Chapter 13. That’s because, with a Chapter 13, you’ll be paying your creditors back over time. With a chapter 7, your debts are wiped away. So, it makes sense that the courts would be stricter about approving a Chapter 7 bankruptcy. When you meet with your Arizona bankruptcy lawyer for the first time, let them know what your goal is. They’ll let you know whether they think it’s possible.

Every Case is Different When it Comes to Bankruptcy

When you fill out your bankruptcy petition, it’s going to ask you to list all your debts. It will also ask you what your standard monthly bills are. This would include your cable bill, cell phone bill and utilities. It will also include your rent or mortgage. The form is also going to ask you questions regarding your income. They’ll want to know how much you make each month. What they’ll do to determine if you qualify for Chapter 7 bankruptcy is subtract your monthly bills from your monthly income. Whatever is left over is what the court will look toward when they make your decision. The general rule is that your debt must be about three times your disposable income each month. If you make $3,000 a month and it costs you $2,000 per month to pay your basic expenses, you’ll be left with $1,000 in disposable income.

Your Arizona Bankruptcy Lawyer Will Do a Debt-to-Income Test

Before you file your bankruptcy petition, your Arizona bankruptcy lawyer is going to perform their own debt-to-income ratio. They’ll do the same test that was outlined above. Their goal is to see how much you can put toward your outstanding debts per month. If you only have $300 per month in disposable income, the means test would only require your debts to be approximately $900 per month. Since it isn’t an exact science, each case must be treated differently.

If You Aren’t Sure You Qualify, Call an Arizona Bankruptcy Lawyer

If you want to file bankruptcy but are afraid you make too much money, turn to someone who can help. One of our Arizona bankruptcy lawyers can review your information and let you know if it’s possible to file a Chapter 7 bankruptcy. They may recommend that you file a Chapter 13 instead. It all depends on the facts of your case.