Chapter 13 Bankruptcy Qualificaiton
Chapter 13 Bankruptcy is different from the other forms of bankruptcy relief in that it has limits on the amount of debt the debtor can have and still file a Chapter 13 Bankruptcy. Here are the maximum amount of debt permitted in Chapter 13 Bankruptcy:
- Secured debt: $922,975
- Unsecured debt: $307,675
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 examples of unsecured debts are credit card debts, medical bills, personal 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.
These debt limits are adjusted every three years and last increased in April, 2007. (a.)
Chapter 13 Bankruptcy is available only to individuals. The debtor must have a source of income that permits them to make monthly payments according to the plan they propose.
(a.) As of April 1, 2007 under § 109(e) Eligibility for Chapter 13, unsecured liquidated debt, increased from $307,675 to $336,900; secured liquidated debt, from $922,975 to $1,010,650. Keep in mind that most people qualify for a Chapter 13 but these new guidelines are good news for anyone who is coming out of school with a tremendous amount of student loans such as doctors or lawyers. The student loans are unsecured, non-priority, and are generally non-dischargeable debts. So the bottom line is the student loan increases the amount of your unsecured debt that must be considered as to whether or not you qualify for a Chapter 13.