Qualifying for Chapter 13 Bankruptcy


Chapter 13 is a highly useful personal bankruptcy option that is often overlooked in favor of its much more common counterpart, Chapter 7. However, Chapter 13 is not for everyone. Debtors interested in Chapter 13 must meet several criteria for their petitions to be successful. For many debtors who do not qualify for Chapter 7 relief, Chapter 13 may be one of their few remaining options. For others, Chapter 13 may represent the more effective method of achieving their goals even if they still qualify for relief under a different chapter. 

To say that Chapter 13 has more stringent qualifications than Chapter 7 is not really accurate — the requirements are simply different. Some people may qualify for Chapter 7, but not Chapter 13. Others may qualify for Chapter 13, but not Chapter 7. Still others may qualify for both. The main requirements you must meet to qualify for Chapter 13 relief are as follows: 

  • You must be an individual. Unlike Chapter 7, Chapter 13 is limited to natural persons and is not an option for corporations and other business organizations. It may, however, be open to sole proprietors. 
  • You must have a regular monthly income. 
  • Your total secured debt must be less than $1,081,400 on the date of filing. 
  • Your total unsecured debt must be less than $360,475 on the date of filing. 

These numbers are adjusted periodically to reflect consumer price index fluctuations. 

Chapter 13 bankruptcy is usually worth considering, especially if your problem debt is primarily secured or otherwise nondischargeable.