How much debt must you have to be legally allowed to declare bankruptcy?

In addition to this law question, I have some ethics questions:


How much SHOULD you have to be in debt to be legally allowed to declare bankruptcy? 0? 10k? 20k? 50k? 100k?





%26amp; why should debt for a home mortgage, business, or other be cleared during a bankruptcy, but not a studetn loan debt? shouldn%26#039;t all debts be treated the same? a debt is a debt is a debt, right?




How much debt must you have to be legally allowed to declare bankruptcy?
There%26#039;s no particular amount - as long as your debts exceed your assets, you can file for bankruptcy. It probably wouldn%26#039;t make much sense to do in a lot of cases, but there%26#039;s no reason to set a minimum by law.





Student loan debt is not forgiven in order to give lenders an incentive to lend to students. Otherwise there would be very little availability of student loans - students are incredibly risky people to lend to.
Reply:Great question. There is actually no legal minimum debt level for a person or entity to file for backruptcy. You can file if you only owe five dollars. That wouldn%26#039;t make much sense and would end up costing you a lot more than what you were able to make up in cleared debt.





Another way to look at it is, It%26#039;s not how much you owe but how much the bankruptcy court feels you can reasonably repay. If you have say $50,000 in unsecured debt and your yearly household income is $60,00 chances are you will be denied a favorable decision on a chapter 7 filing. The court will deny the chapter 7 and steer you towards a chapter 13 bankruptcy where all of your creditors are repayed at a lesser amount over a 3 year period. All of your income and assets are looked at and every financial move you make for the 3 years is done through the court. It%26#039;s called receivership.





Student loans are either made by or guaranteed by the federal government. If you were in charge of making the rules and laws for a country and could make a law that no one could ever not repay you for money you owe them, Wouldn%26#039;t yo do that? That%26#039;s why you have to pay back those student loans. You also left out another class of debts that can%26#039;t be wiped away with a bankruptcy. Monies owed the I.R.S. So a debt is a debt is a debt, right... but a debtor is not a debtor is not a debtor. It%26#039;s all in who controls the rules. I rest my case.
Reply:Student loans are not subject to a bankruptcy claim, nor should they be.