How Much Debt Do I Need to File Bankruptcy?

Debt can grow quickly, and the pressure often follows close behind. Late fees pile up, collection calls interrupt your day, and it becomes hard to see a way forward. If this feels familiar, you are not alone.

At Yusufov Law Firm, we help individuals and small businesses throughout Mesa, Phoenix, and Tucson understand their options for real financial relief. Many people assume there is a minimum amount of debt required to file for bankruptcy, but that is not always the case.

In this guide, we explain whether a debt threshold exists, how courts look at financial hardship, and how to decide when bankruptcy may be the right step.

Is There a Minimum Debt Requirement for Filing Bankruptcy?

No, bankruptcy law does not set a minimum dollar amount to file. A case can be filed with a small balance or a very large one. The real question is whether filing gives you better outcomes than fighting the debt month after month.

The right decision depends on your income, assets, debt types, and what your creditors are doing. Two people with the same dollar amount in debt can reach very different decisions. That is why a short conversation about your facts can go a long way.

With that foundation in place, let us look at the practical factors that carry more weight than a simple number on a spreadsheet.

Key Factors in Deciding When to File Bankruptcy

Dollar totals matter, but they are not everything. Timing, debt mix, and creditor behavior all play a role. Here are the points we look at together.

Ability to Repay Debts Outside of Bankruptcy

Ask yourself if you can pay the debts in full within five years without missing rent, car payments, or groceries. If the math shows endless minimums and no finish line, bankruptcy can reset the clock. For many Arizonans, that reset is worth more than the number itself.

Creditor Negotiations

Some creditors will offer a payment plan or a lump sum deal. Others refuse or sue quickly. If talks stall, bankruptcy can stop lawsuits and put all debts under one legal roof.

Dischargeability of Debts

Credit cards, medical bills, and personal loans often get wiped out. Certain debts do not, such as recent taxes or support obligations. Knowing which bucket your debts fall into helps you determine how bankruptcy can help.

Specific Circumstances

Medical issues, a sudden job loss, or a sharp drop in income can tilt the decision. So can the risk of a wage garnishment or a pending repossession. Arizona exemptions and your asset mix also matter since we want to protect as much property as possible.

Maximum Debt Limits for Chapter 13 Bankruptcy

There is no minimum debt requirement to file, but Chapter 13 has upper limits set by federal law. Arizona follows these federal caps.

On April 1, 2025, these limits were adjusted for inflation. To qualify for Chapter 13, your debts (specifically those that are noncontingent and liquidated) must fall below the separate caps for unsecured and secured debt listed below.

Note: The temporary “combined” debt limit of $2,750,000 that applied in previous years has expired. Debtors must now meet the separate unsecured and secured limits.

Debt Type	Current Limit (Valid until April 2028)	Notes
Unsecured Debt	$526,700	Includes credit cards, medical bills, and personal loans.
Secured Debt	$1,580,125	Includes mortgages and vehicle loans.

We track the current rules in the District of Arizona and guide you to the right chapter based on your balances. If your debts are over the Chapter 13 limit, Chapter 11 Subchapter V could be the better fit, especially for individuals with high debt or small businesses.

Will Bankruptcy Eliminate All My Debts?

Bankruptcy can wipe out a lot of debt, but not every kind. Wiping out means a discharge, which ends your personal liability. Some debts survive and need a different approach.

Common debts that usually do not get discharged include:

• Recent income taxes, certain payroll taxes, and tax penalties.
• Domestic support obligations, child support, and alimony.
• Debts from fraud or willful misconduct, if a court finds it.
• Criminal fines and DUI-related injury claims.
• Student loans, unless you prove undue hardship under a strict test.

Even if a debt survives, Chapter 13 can give breathing room with a structured plan. That plan can save a home or car while you deal with your outstanding debt.

Factors to Help You Decide When to File Bankruptcy

Your debt mix and present goals drive the timing more than any single number. Look at what types of debts you have and what you want to keep.

Unsecured Debts

If your balances are mostly unsecured, bankruptcy can be a strong option, whether the total is $8,000 or $80,000. Typical unsecured debts include credit cards, cash advance loans, and medical bills. If you are dealing primarily with unsecured debt, you will want to file the bankruptcy before the creditors are able to garnish your wages, and preferably before the creditors start filing lawsuits against you. Many clients clear these debts with Chapter 7 and get back to stable budgeting.

Secured Debts

Falling behind on a mortgage or car loan puts the collateral at risk. Filing can stop a foreclosure or repossession in Arizona, then give you a path to cure the arrears. In these cases, it is critical to file the bankruptcy before the creditor can repossess or foreclose on your property.  Chapter 13 often lets you keep the property and catch up over time.

Employment Situation

If job loss or reduced hours made the bills impossible, you could qualify for Chapter 7 under the Means Test. Discharging unsecured balances can free cash to stay current on secured debts. Even with a steady job, eliminating or reducing unsecured payments can protect your home or car.  In these cases, it is often best to file before your income increases again.  This way, you retain your eligibility for Chapter 7 bankruptcy, which you could lose if your income increases above the median income for a household of your size.

Creditor Actions

If a creditor files a lawsuit or starts garnishing wages, time matters. Bankruptcy triggers the automatic stay, which pauses most collections at once. Warning signs include:

• Summons or complaints arriving at your home.
• Wage garnishment notices sent to your employer.
• Vehicle repossession threats or a repossession already scheduled.
• Trustee sale notices or foreclosure timelines.

If these steps are in play, fast action can protect income and property. A quick review of the papers can help determine what relief is available under Arizona and federal law.

Whether To File Chapter 7 and Chapter 13 Bankruptcy

Filing can work whether your debt is small or large, as long as you meet the chapter rules. The best fit depends on filing history, income, and the kind of debts you carry. Here are the core requirements.

Filing History Requirements

Prior cases affect the timing for a new discharge. The waiting period depends on the earlier chapter and whether the court entered a discharge in that case. We check your prior case dates and set a timeline that keeps your new case eligible.

Income Requirements

Chapter 7 uses the Means Test, which compares your last six months of income with the Arizona median for your household size. If you are under the median, you usually pass. If you are over, further allowed expenses can still show that little to no disposable income exists.

Acceptable Debt Requirements

Unsecured debts like payday loans and credit cards usually get discharged. If you have a car or a home you no longer want, the related debt can be wiped out, and the collateral surrendered. On the other hand, Chapter 13 lets you catch up on mortgage or car arrears while keeping the asset.

Chapter 13 as an Alternative

If Chapter 7 does not fit, Chapter 13 can protect assets while reducing what you pay on unsecured debt. The plan runs three to five years and is overseen by the court. It can also put non-dischargeable balances into a manageable payment, so interest and pressure stop piling up.

Can You Still Pay Off Your Debts Outside Bankruptcy?

Paying only the minimum on credit cards rarely clears the balance within five years. Interest, late fees, and penalty rates keep the balance increasing, even when you pay every month. That treadmill wears people down.

By contrast, Chapter 7 often finishes in a few months and wipes unsecured debt entirely. Chapter 13 runs longer, but the total paid on unsecured claims can be a fraction of the full repayment with interest. Many clients exit bankruptcy faster and cheaper than they could exit any repayment plan.

Considering Bankruptcy? Contact Yusufov Law Firm Today

If debt is getting louder than the rest of your life, let us help you sort it out. Yusufov Law Firm serves clients across Mesa, Phoenix, and Tucson, and we work to protect homes, cars, wages, and businesses. We welcome your questions and offer clear steps you can act on.

Reach out at (520) 745-4429 in Tucson or (480) 788-0098 in the Mesa and Phoenix area, or use our contact page to start a conversation. We can review your budget, explain Arizona exemptions, and map out Chapter 7, Chapter 13, or another path that fits. Feel free to call us and let us help you get back on track sooner rather than later.