How much debt is required to file for bankruptcy?

Bankruptcy is a term that carries a heavy weight. For many, it feels like a last resort — a decision made only when there seems to be no other way out of a financial crisis. But hundreds of thousands of Americans filed for bankruptcy last year alone, reflecting the financial strain that many are under due to elevated interest rates, persistent inflation and other forms of economic uncertainty. Add in the fact that the average credit card user owes nearly $8,000 — and that the total amount of debt nationwide recently hit a record high — and it's clear why so many people have taken such a drastic step.

But despite its reputation, filing for bankruptcy can actually be a much-needed fresh start for many people. After all, the process provides legal protections that stop creditors from aggressive collection efforts and helps people regain control over their financial lives while wiping the slate clean from overwhelming debt obligations. If you're dealing with overwhelming amounts of debt, though, and are considering this route, it's important to make sure that you fully understand the nuances before you file, such as whether your debt level qualifies. 

So how much debt is required to file for bankruptcy? And are there other debt relief strategies worth considering before taking this step? That's what we'll break down below.

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How much debt is required to file for bankruptcy?

There is no specific dollar amount of debt required to file for bankruptcy. Rather, bankruptcy eligibility is determined by a combination of your financial situation, the type of bankruptcy you're filing for and whether you can realistically pay off your debts through other means. In the U.S., the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Here are the requirements for each type:

• Chapter 7 Bankruptcy: Often called "liability liquidation," Chapter 7 is designed for those with little to no disposable income. To qualify, you must pass a means test that compares your income to the median income in your state. If your income is too high, you may not qualify. Chapter 7 can eliminate unsecured debts like credit card balances and medical bills, but you may need to surrender certain assets.
• Chapter 13 Bankruptcy: This option is better suited for those with a stable income who can afford to repay a portion of their debts over three to five years. There's a debt limit to consider here, however. As of 2025, you cannot owe more than $2,750,000 in combined secured and unsecured debt to qualify for Chapter 13.

The key takeaway is that bankruptcy isn't reserved for people with sky-high debt levels. It's ultimately about whether your debts have become unmanageable compared to your current financial circumstances.

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Alternative debt relief strategies worth considering

Before filing for bankruptcy, it may be worth exploring the other debt relief options that could help you avoid the complexities and long-term effects of a bankruptcy filing. Here are a few alternatives to consider:

• Debt consolidation: If you have multiple debts, consolidating them into a single loan with a lower interest rate can simplify your payments and reduce the overall cost. This is a good option if you still have a reasonable credit score, as you'll typically need at least a fair one to qualify for this type of borrowing.
• Debt settlement: When you settle your debt, the goal is to negotiate with your creditors to pay a reduced amount as a lump sum. While effective, this strategy typically works best with the help of a debt relief expert, as their experience with negotiations and their contacts with creditors can yield better results. It's also worth noting that this route can negatively impact your credit score and may have tax implications.
• Credit counseling: Credit counseling agencies can help you create a debt management plan. These plans consolidate your debts into one monthly payment, often with reduced interest rates and fees, and can be completed in three to five years.

The bottom line

Filing for bankruptcy is a major decision that should not be taken lightly, but it's also not something to fear if your financial situation has become unmanageable. Bankruptcy laws exist to help people regain stability and move forward — not to punish them. And, the amount of debt required to file isn't as important as your overall ability to repay that debt within a reasonable timeframe. 

However, bankruptcy isn't the only option. By exploring other debt relief strategies, you might find a solution that better fits your needs without the long-term consequences of a bankruptcy filing. If you're unsure which path to take, consider consulting with a debt relief expert on your options. They can provide personalized guidance to help you make the best decision for your financial health.