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How much debt do you have to be in to claim bankruptcy?

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How much debt do you have to be in to claim bankruptcy?
The actual amount varies from situation to situation, but the general rules used to consider claiming bankruptcy are summarized as follows:
* The amount owed to creditors must be greater than that held in marketable assets (e.g., bank accounts, car, 401k, etc.)
* The income (after taxes and required living expenses) of the debtor(s) does not cover the minimum amount of principal and interest necessary to pay off all debt in a "reasonable amount of time" (for non-primary real estate assets, people use seven to ten years)
* You have made a very strong attempt to reduce your living expenses to only the necessities
* You have been unable to negotiate a workout with one or all of your creditors

Bankruptcy is a last resort. You will keep your home (if you don't own it outright, if you do, you will end up having to get a mortgage to pay off creditors) and may keep a vehicle, but that is it. You will not be able to get credit for at least seven years following the event, making major life changes difficult (e.g., a new baby, marriage, school, etc.).

If you are considering bankruptcy, see a credit professional in order to be sure that bankruptcy is your only route to debt freedom.
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