Interestingly enough people who are not familiar with bankruptcy may not know that you do not have to have a negative checking account balance before considering bankruptcy. No requirement is provided in the bankruptcy code that indicates that a person has to be insolvent to file bankruptcy.
What does this mean for you? If you make a steady income and have debts that are becoming increasingly difficult to pay each month, then bankruptcyprotection may be an option to consider.
For example, I observed another attorney's client at a Chapter 7 creditor's meeting a few months ago. We will call this man Bob. Bob was in his late eighties and had spent all of his cash and retirement money trying to pay his creditors before filing bankruptcy. When Bob met with the Trustee he was apologetic because he had worked as hard as he could to pay his obligations. He never wanted to file bankruptcy. However, when his obligations became too much he spent all of his cash and retirement funds to satisfy them. In the end Bob did not have enough money. Bob was left with nothing after paying all he had to his creditors. In the end he filed bankruptcy to obtain a discharge of the debts that he could no longer afford.
If Bob would have considered filing bankruptcy months earlier it is quite possible that he could have saved a good portion of his assets and filed bankruptcy to obtain a discharge of his debts. This would have provided Bob with money to live on and a fresh financial start.
So do you need a negative checking account balance to file bankruptcy? While some people do wait for this event to file bankruptcy, it is not necessary. Consider consulting with our experienced Houston bankruptcy attorneys to consider your debt relief options under either Chapter 7 or Chapter 13 of the bankruptcy code.