Do I qualify for Chapter 13?

Chapter 13 is different from the other forms of bankruptcy relief :   it has limits on the amount of debt the debtor can have and file Chapter 13.

Debt limits

Here are the maximum amount of debt permitted in Chapter 13:

  • Secured debt: $1,149,525
  • Unsecured debt: $383,175

Secured debts are obligations supported by collateral, such as home mortgages, car loans, tax liens, etc.

Unsecured debts have no collateral, or security, for their payment. Typical  unsecured debts are credit cards, medical bills, and student loans.

Some debts may be partially secured, and partially unsecured, such as the case of a judgment lien that is greater than the value of the debtor’s assets.

Chapter 13 eligibility

To file 13,  the debtor must meet both the secured and the unsecured cap.  If either total exceeds the cap, the debtor doesn’t qualify for Chapter 13.

There are other requirements for eligibility.

Chapter 13 is available only to individuals.  Corporations, partnerships, and LLC’s can’t file 13.

The debtor must have a source of income sufficient to pay their current living expenses and  the monthly payments according to the plan they propose.

The Chapter 13 debt limits are adjusted every three years, based on the cost of living index.  The next adjustment is expected in April, 2016.