How much is enough?

There is no minimum amount of debt required to file for bankruptcy protection in Philadelphia, PA or the surrounding areas.  However, it should be noted that bankruptcy fees generally start at $1,000.00 not including bankruptcy court filing fees or case costs.  Accordingly, if one has less than $5,000.00 total  in unsecured, non-priority debt, such as credit cards, personal loans, medical bills, etc., they may be better served working out a payment plan including an interest reduction with the creditors holding the subject debt(s).

Very generally speaking, for every $10,000.00 worth of debt, minimum payments, penalties and late fees add up to around $500.00 per month.  Meaning the $10,000.00 worth of outstanding debt costs the borrower (debtor) around $6,000.00 dollars per year, every year.  Unless a larger amount is paid  on a monthly basis in order to actually reduce not just “pay” the minimums.  Say a debtor is owing $25,000.00 to unsecured creditors (credit cards, etc.), using the same ratio as above, the debtor would be paying about $1,250.00 per month in minimum payments, penalties and late fees.  Once out of the credit trap, said monthly payments can be saved for the future and/or applied to a home, car, school tuition or other personal goals.

In summary, the amount of debt, unless extremely low is irrelevant.  The determining factor for a potential petitioner in bankruptcy shall be the cost of the debt(s) on an ongoing monthly basis.  If the cost of debt is unaffordable or monthly payments are not reducing such debt in a timely fashion, then one should consider their options in eliminating or reducing debt through a Chapter 7 or Chapter 13 Bankruptcy proceeding.

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact Sadek Law Offices, LLC at 215-545-0008 or email brad@sadek-cooper-site.  Thank you.

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