There is no established minimum debt amount to file for bankruptcy. But it probably wouldn’t make a lot of sense unless you were struggling severely to make payments on current debts. Whether filing for bankruptcy makes sense for you will depend entirely on your circumstances. Debt qualifications for bankruptcy are related to how much you earn and how much you owe. Chapter 7 filers may earn too much money or have too much disposable income to file for Chapter 7 while Chapter 13 filers may find themselves owing too much money to qualify under Chapter 13. Below, we’ll take a deeper look at bankruptcy’s debt qualifications and how they may impact your individual situation.

When Does it Make Sense to File for Bankruptcy?

There is no minimum amount of debt, but that doesn’t mean it will necessarily make sense for everyone’s situation. Whether you should file depends on three important questions:


  • Will I be able to pay my debts without filing for bankruptcy?
  • Are my creditors willing to work with me on changing the terms of the loan contract?
  • Will bankruptcy wipe out the types of debts I owe?


All of this information can be determined by sitting down with a bankruptcy attorney to discuss your situation.

Chapter 13 Debt Limits

While there is no established minimum for filing for bankruptcy, there is an established maximum amount of debt you can owe to file for certain types of bankruptcy—namely, Chapter 13. As of 2020, you can only owe $419,275 in unsecured debts and $1,257,850 in unsecured debt. 

Chapter 7 Income Limits

Chapter 7 requires a means test to prevent abuse of bankruptcy. If you earn more than the state’s median income, which is adjusted yearly, you will have to pass the means test. If you earn less than the state’s median income, you automatically qualify. 


The means test calculates your earned income against your expenses. The more disposable income you have left over, the less likely it is that you will qualify for Chapter 7.

Can You Afford to Pay Back Your Debts Outside of Bankruptcy?

One of the main reasons you don’t want to make the decision to file for bankruptcy hastily is that you will be prevented from filing for bankruptcy again for several years to come. So if you file for bankruptcy and receive a discharge only to incur more debt throughout the years that follow, you may have no legal recourse if those debts get out of hand. 


If you can afford to repay the debts without resorting to bankruptcy, it’s worth considering exhausting that avenue first. You may also be able to negotiate reduced payments, extend the loan period, or simply settle the debts for less than you owe. Note that not all creditors will be willing to work with you, but it does help to mention bankruptcy during the negotiation process. There are no creditors who prefer nothing to something.

Will Bankruptcy Eliminate the Types of Debts I Owe?

It’s true that bankruptcy won’t wipe out all types of debts. It’s also true that some types of bankruptcy are better than others for those with certain types of debts. Before you make the decision to file for bankruptcy, you will want to know what types of debt are going to be wiped out and which ones will remain. You’ll also want to have a sense of what your finances will look like once your debts have been wiped out.


If you’ve reorganized your debts in Chapter 13, you’ll want to make sure that you can continue to make payments on your reorganization plan. 

Talk to a South Carolina Bankruptcy Lawyer Today

If you have any questions concerning debt qualifications for bankruptcy, don’t hesitate to give our office a call. The Steadman Law Firm, P.A. has helped several South Carolina residents manage crippling debt and start fresh. Call us today for more information on how we can help.