The process of filing for bankruptcy can be a very complex one if you don’t have an expert to guide you. Many people ask the question: how much do I have to owe before I can file for bankruptcy?  In this article, we’ll answer that question and educate you on topics related to debt management.

In recent years, there has been a rise in bankruptcy filings. With the influx of bankruptcy cases, more may be wondering what bankruptcy actually looks like. In addition to answering your questions, it is important to understand the different types of bankruptcies. There is Chapter 7, Chapter 11, and Chapter 13 Bankruptcy. Read “Chapter 7 vs Chapter 13” or “Chapter 7 vs Chapter 11” to help understand the differences.

How Much Debt is enough to File Chapter 7 Bankruptcy?

There’s no threshold to determine when you can file for bankruptcy. You can even file for bankruptcy if you owe a $2,000 credit card debt. However, the fact that you can file for bankruptcy anytime does not make doing that a good idea and your bankruptcy petition may be thrown out if the bankruptcy court does not see a reason why it should be granted.

It’s important to realize that bankruptcy can vary slightly from state to state. For instance, if you are hoping to file for Chapter 7 bankruptcy in Florida, it may look a little different from an Illinois Chapter 7 bankruptcy.

Also, your income may determine the type of bankruptcy you should file for. For example, you’ll have to file under Chapter 13 bankruptcy if you don’t meet the income requirement for a Chapter 7 bankruptcy. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy if more of a repayment plan. If you opt to hire an attorney to help you file a Chapter 13 bankruptcy plan, then you may have to pay up to $3,500 as attorney fees alone. Chapter 13 debt limits are important to know for qualifying for a bankruptcy discharge. Also, you’ll be required to pay administrative fees to the bankruptcy court, and you won’t have the opportunity to incur any debt pending the time you receive a bankruptcy discharge from the bankruptcy court. As such, it is not a good idea to file for debt when the amount you owe is low.

However, if you don’t have many assets, and you meet the income qualification for Chapter 7, then you should file for a chapter 7 bankruptcy as it will help get rid of your debts in less than six months.

The only disadvantage with this method is that you won’t qualify for a Chapter 7 bankruptcy discharge till after eight years. Even if you have a disability, lose your job, or have a financial misfortune within the eight-year period, your debt won’t be forgiven until after eight years. And if you’re filing for Chapter 7 bankruptcy without an attorney, you need to be really careful as a single mistake can make you lose your assets or even have your case turned down. Filing for bankruptcy is dependent on where you are. For instance, if you are in Washington, read: “Washington State Bankruptcy” to understand more.

Income vs. Expenses vs. Debts

For example, let’s say you are considering filing a Chapter 7 bankruptcy in Indiana. Let’s say that your utility bill is very high in the winter. You may consider whether that utility bill will continue to be high in Indiana even in the summer.

You should take your time to consider all the debt relief options that are available before filing for any type of bankruptcy.

You should make a comparison of your income, expenses, and debt before making any serious financial decision. Is your income high enough to pay for your necessary expenses and debts? If it is not, then it may be time to seek a debt relief option,

Earn More Money

There are many ways to increase your income, and some of them include working overtime, getting a second job, making money from your hobby, etc.

Reduce your Expenses

The mistake most people make is that they raise the amount of money they spend once their income has increased; as such, you should always have it in mind that Increasing your income and your expenses won’t help you to reduce your debt. Sometimes, you may only need to reduce your expenses if you want to pay off your debt, other times, it’ll require a much drastic approach, such as reducing your expenses and raising your income.

Debt Management

We have a Savvy Debt Payoff Planner that will automate your budget to assist you in coming up with strategies that can help you pay off your debt fast. If you use this software, you will see results that will impress you.

Debt Settlement

You can try out some debt settlement plans along with working within your budget and increasing your income. If you appropriately negotiate with your creditors, they may be willing to reduce your debt. However, you should have it at the back of your mind that the money written off or forgiven is seen as a taxable income. You may not receive as good as of a discount if you face a debt collection lawsuit.

You can choose to negotiate with your creditors’ one on one or hire a debt settlement company to help with the negotiation.

How Long Will it Take to Pay Off Your Debts?

Another factor to consider before filing for bankruptcy is the length of time it will take you to pay off your debt if you don’t file for bankruptcy. If you’re on a tight budget, it may take you more time to pay off your debt than someone who can reduce his/her expenses and increase his/her income.

For example, if you owe the credit card company $10,000 and your payment schedule is $235 per month for a period of ten years, it means that you’ll be paying an interest of $18,000 on your $10,000 debt. As such, if you’re in a situation like this, then the best option is to file for bankruptcy.

In managing your finance, you should not make your choice based on another person’s debt relief strategy; even if you’re consulting a personal finance manager, you should listen to the options presented to you and choose the one that is most convenient.

The U.K.’s tax watchdog has seized three non-fungible tax tokens in an investigation into a tax fraud case that was worth 1.4 million pounds ($1.9 million) which is the first-ever enforcement of this kind.

Three suspects have been detained for attempting to defraud the authorities by allegedly using a website of fake companies worth $250, Her Majesty’s Revenue and Customs said by email. Authorities also confiscated cryptocurrency assets, estimated to be worth five thousand pounds, and NFTs are still to be evaluated.

NFTs, which is a form of digital asset that can be traded via the blockchain network, gained a lot of acceptance among crypto traders and enthusiasts of all kinds this year and even made their way into the most prestigious auction houses like Christie’s as well as Sotheby’s which have multimillion-dollar sales. This market has around $16 billion, an analysis of NFTGo data from cryptocurrency research firm Messari revealed this month.

The tokens, which represent the ownership of digital artifacts such as images or music, are typically purchased and sold through the Ether cryptocurrency. Most popular tokens come in the form of avatars which owners can put as their profile pictures on the internet, similar to those used in the collections of the Bored Ape Yacht Club or CryptoPunks. These can be worth millions and have drawn the attention of celebrities in recent months, from stars like Paris Hilton, Reese Witherspoon, and Serena Williams.

The concerns on NFT legitimacy have been fueled since the beginning of 2022. The beginners within the industry find it difficult to differentiate between the original and copied digital assets, especially with NFT avars. Other NFT projects, like AdRunner, which is a metaverse advertising project seem to be safer in terms of validity. The utility NFT projects focus on building a strong and dedicated community and deliver tokens with value.

The scam NFT cases are growing in number. Unfortunately, with the blockchain technology criminals believe it is much easier to deceive the government. Hence, they get involved in numerous money laundering, identity theft and related criminal activities. However, authorities are cautious, as well and are quite quick to seize any such occurrences at first notice.

“Our first arrest of a Non-Fungible Token is as a cautionary tale to anyone who believes they can use crypto assets as a way to conceal money away from HMRC,” said Nick Sharp, the Deputy Director of HMRC’s Economic Crime. “We constantly evolve to meet the demands of new technologies to make sure we stay in step with the ways that criminals and evaders seek for ways to conceal their assets.”

This comes just one day after the U.S. seized $3.6 billion in stolen Bitcoin in the most significant financial seizure to date, showing police determination to prove Bitcoin isn’t a secure location for criminals to commit crimes.

“This incident proves that criminals aren’t able to hide in the crypto world,” said David Carlisle. He is the Director of Policy & Regulatory Affairs at crypto research firm Elliptic. “Enforcement agencies can monitor and trace criminals’ transactions and also seize NFTs and crypto assets that are used in illegal activity, depriving criminals of their money.”

The fraud suspects are said to have employed sophisticated techniques to conceal their identities. HMRC said that this includes false and stolen identities, fake addresses, pre-paid, unregistered cell phones, Virtual Private Networks (VPNs), fake invoices, and claiming to be engaged in legitimate business transactions.

“Fraudsters generally thrive when the value of assets rises rapidly, and it’s no surprise that they are benefiting from the rapid growth of NFTs,” said Sam Roberts, who is a partner at Law company Cooke, Young and Keidan. “While eliminating legal fees might be one of the main goals of blockchains that are public as well as the asset classes on which they are based but in actual practice, it is not the case – often due to thefts and fraudulent activities.

Legally-adherent creators and owners “should be encouraged to know that courts are still promoting rights to digital ownership, and we can be expecting an increase in this trend soon,” he said.

Considering finance for a refurb? Here’s a closer look at the ins and outs of utilizing it.

Numbers

Although this may seem somewhat obvious, a refurbishment proposal made tends to be almost unbelievable in regard to how much is being requested.

This is often based upon the assumed value of the property, as well as what the value will be of that property once the refurbishment process has been completed.

Looking at the numbers, you have to be careful in crafting a realistic budget and thinking about the timeframe during which the money will be used. There are some cases where it may not be necessary to refurbish a property, especially requiring a sizable amount of money, plus the bridging loan itself could actually prove to be very unprofitable.

Legals

Bridging can sometimes be a very complex process to consider which may require working with solicitors that are familiar with them. For example, someone could request a residential bridge loan, one that they will need to obtain very quickly, so that they can use that money to purchase a home before they have sold theirs.

If you work with solicitors, they can certainly help you, especially creating the paperwork necessary to make the process as expedited as possible.

There are some lenders that will refer law firms to you, especially if you have never done this before, as it will give them confidence about you requesting the money.

Papers

It is vitally important to have all of the documents that you will need to go through this process which will include bank statements, planning permissions, ownership information, company accounts, and many other documents that will certainly be necessary with a heavy refurbishment loan. If you don’t have them, you should not even consider applying for one.

The old saying that you need to have your house in order certainly applies, simply because the rest will literally follow. By working with a seasoned lending manager that can assess the viability of the loan that you want, they may actually help you in making your application go through, plus verify that you have all of the documentation that will be needed.

If you do find someone to help you, when you make your request, the lender will be much more confident, and may approve your loan right away; you may even get a lower rate of interest by working with these professionals.

Exit

Creating an exit plan is absolutely necessary. If it is not the most important aspect of this process, it is certainly one of the most important for getting a heavy refurbishment bridging loan.

To be honest, everyone is looking to make a profit, and avoid heavy losses, all of which can be avoided if you do your proper research, have your information in order, that will ensure your success.

You may also benefit from speaking with architects, quantity surveyors, and even tradesmen that can assist you with this process. You may not even have to pay them for this information, but even if you do, their professional experience will be very valuable if you are trying to obtain a loan in this manner.

Let’s say that you are trying to obtain a long-term mortgage, and this is for rental purposes so that you can make a short-term profit. If you have all the details in order, your application will likely be approved for this reason.

Contingency

This is something that most people will overlook which is a mistake. They are looking at the situation from a glass half full perspective, instead of trying to anticipate the problems that may arise when you are trying to obtain money for a property development.

In the bridging world, if you are the borrower, your proposal needs to be foolproof; you should not say outlandish things or make claims that have no basis, in the reality of the situation.

Although it would be nice to make a substantial profit, which can only happen if you get the money, it should never sound outrageous if you are trying to get a lender to actually give you a loan.

Therefore, a contingency plan needs to be in place if you are denied. There could be situations where the weather will make it impossible for you to move forward, or you may have workers that will not show up for weeks, which can compromise your plans.

Although all of this can be very difficult to think about, you need to be prepared for potential problems that may arise, and have solutions in place that will make your lender more confident about your proposal.

We should also mention that it’s easier to make these proposals when there is no pressure, and you have more time, to complete a project, yet there are some large projects that may lead to difficulties if you are not properly prepared.