Requirements for Filing Chapter 13 Bankruptcy

Chapter 13 is an extremely helpful way to protect assets such as save your home from foreclosure by paying mortgage arrears over time, reducing what is owed on a car and reducing debt in general,  among other things. You have to meet certain requirements to  qualify for Chapter 13, although most people meet the requirements. Only an individual, as opposed to a corporation or LLC, can file. In addition, the filer must have “regular” income, although that is broadly defined.  In addition, there are debt limits on how much someone can owe in order to file. Until June 21, 2022 you could not file chapter 13 if you had more than $465,275 in unsecured debt or more than $1,395,875.00 in secured debt. While that might seem like a lot, if someone had a failed business where they had signed personal guarantees, those numbers could be easily exceeded. In that case, they would be forced to turn to a Chapter 11 which is a more complicated and expensive way of accomplishing the same thing. However, on June 21, 2022 the President signed a new law that increased the debt limit to a combined $2,750,000.00. As a result, more individuals can qualify for chapter 11.