How Much Debt Do You Need to Have to File Bankruptcy in Ohio?

This is a common question we hear from clients who are curious about Ohio bankruptcy laws. The simplest answer to this question is that there is no minimum debt required for bankruptcy in Ohio. Instead, whether or not you qualify for bankruptcy will depend on your individual situation. In addition to your debt load, there are other important factors to consider.

These include your:

• Types of debts
• Ability to pay your debts outside of bankruptcy
• Creditors’ willingness to reach a resolution with you outside of bankruptcy
• Ability to discharge, or wipe out, the types of debts you have in bankruptcy
• Unique circumstances

While there is not a minimum amount of debt required to file bankruptcy, there is a maximum debt limit. If you plan to file chapter 13 bankruptcy, you can’t have more than $1,257,850 in secured debt or $419,275 in unsecured debt as of July 2020. If you need to file a Chapter 13 but you exceed the debt limit, you can file a chapter 11. 

How Do the Types of Debts I have Affect Filing for Bankruptcy?

In order to know if bankruptcy will eliminate all your debts, you need an understanding of how, under law, different types of debts cannot be discharged by bankruptcy. These non-dischargeable debts include:

• Some tax debts
• Domestic support obligations (child support and alimony)
• Debts from fraudulent acts or criminal behavior (drunk driving)
• Student loan debt

Are You Able to Repay Your Debts Outside of Bankruptcy?

Prior to filing for bankruptcy, consider the amount of income you have and if it is sufficient to pay your debts. If it is high enough, you may not be eligible for chapter 7 bankruptcy, or you may have to pay a considerable portion of your unsecured debts in chapter 13 bankruptcy.

On the other hand, if your debt is relatively low and you have enough income to pay it, it will likely be in your best interest to put off filing for bankruptcy until you need it the most. This is due to the limits on how often you can receive bankruptcy relief. If you file with a small amount of debt you can repay, you may not be able to receive another discharge in bankruptcy for many years.

How Do I Know Whether to File Chapter 7 or Chapter 13 Bankruptcy?

Although bankruptcy can be a viable option regardless of how little debt you have, there are certain requirements you need to meet in order to be eligible.

These include:

• Filing history requirements: If you filed and were discharged through bankruptcy in the past, you may not qualify for another discharge for several more years. The exact number of years will depend on the type of bankruptcy and your specific circumstances.
• Income requirements: To be eligible for chapter 7 bankruptcy, you will have to pass the chapter 7 Means Test, in which your income is compared to the incomes of other Ohio families of your size. This helps the court decide whether you have the ability to pay off your debts.
• Other acceptable debt requirements: Only certain types of debts, like credit card debt and payday loans, can be discharged. Debts you can discharge under chapter 13 bankruptcy include a home or car for which you are behind on the loan.

Our Northeast Ohio Bankruptcy Attorneys proudly serve the Akron, Canton, Wooster, and New Philadelphia communities. Give us a call at 234-678-0626 or fill out our online contact form to schedule a free consultation to see if filing for bankruptcy is right for your individual situation.