What exactly does filing bankruptcy mean and how much will effect me in the future

Question

how much in debt do u have to be

Answer 1

Filing bankruptcy means you are insolvent and unable to pay your debts in a reasonable amount of time.

Depending on your state/jurisdiction you need $10,000-$50,000 of debt to apply for bankruptcy. Aside from the negative emotions that accompany filing bankruptcy and possible public shame, your credit report will do 10 years of time for this move.

You'll have to learn to live slim and on a cash only basis for the first 2-3 years for sure. Unless you have a well paying job, you won't likely get loans or any credit. If you do the interest rate will make your head spin.

Just keep a low financial profile and don't spend what you can't afford.

Just keep saving and start over.

Answer 2

It depends upon which chapter you file

If you file for Chpt 7 you need to take the means test.  It applies only to individuals and only those individuals whose debt is primarily consumer debt.

The means test is calculated comparing the debtor's average income for the past six months (current monthly income), annualized, to the median income for households of the same size in the debtor's state of residence. If the debtor's income is less than or equal to the state median income, the debtor "passes" the means test and may file Chapter 7.

Chapter 13 bankruptcy is a repayment plan that protects the debtor from collection action during the case and discharges any unpaid balance of dischargeable debts at the end of the plan.

In Chapter 13, the debtor can impose a debt management plan on creditors, which creditors must accept, stopping the running of interest on credit card debt. The court will enforce the plan against uncooperative creditors.

The discharge in Chapter 13 covers many debts that cannot be discharged in Chapter 7. It is a powerful tool for debtors to regain control of their financial lives and to get a meaningful fresh start.

Do not try and do this on your own, ignore those who say you can go it alone, there are far too many legal loopholes that creditors can get you on,  Seek legal counsel when you file.

As to your credit, depends upon which way you go.  Chpt 7 stays on your credit report 10 yrs.  Chpt 13 will clear debts faster and only reflect on your report for typicaly 3 to 5 years.

Running of Reporting Period - Section 605 [15 U.S.C. § 1681c]

Hope this answers your question

LEGAL DISCLAIMER: The advice contained herein is for informational purposes only. It is not to be construed as Legal Counsel nor Legal Advice.