Bankruptcy Basics: File for Just One Debt?

We answer a lot of questions about filing for bankruptcy, but one of the “bankruptcy basics” we are most frequently asked is this: Can I file for just one kind of debt (e.g. medical, credit card, etc.)?  The answer is, no.

Go Big or Go Home

When you’re filing for bankruptcy, you’re declaring your debt to be out of control, to big to handle, irrecoverable.  Saying you have money to pay $3,000 worth of medical bills, but “can’t pay” $500 worth of credit card debt doesn’t fly in the court system.

The courts treat all of your creditors as equals.  So, when you file for bankruptcy, you file on everything.  This is one of the most essential bankruptcy basics to understand before going in headfirst.  There is no picking and choosing.

When you file Chapter 7, for example, your non-exempt assets may be turned over to the courts, and they are sold in order to pay off your creditors.  Everyone who you owe may get a slice of the pie.  You aren’t allowed any say in who gets how much.  No favoring a personal loan to your brother over credit card debt to a major company.

So, if you’re thinking about filing for bankruptcy on only one debt, then bankruptcy might not be for you.  Try to figure out a way to make that payment work!  But, if a single debt is just too overwhelming (oftentimes medical debt is the culprit), then filing for bankruptcy might be the greatest thing you can do for yourself!