Monday, July 17, 2017

How Much Debt Do I Need To Have To File A Chapter 13 Bankruptcy?

Bankruptcy for consumers comes in one of two forms; a Chapter 7 case, or a Chapter 13 case. A Chapter 7 is a liquidation of debts, whereby your unsecured debts are completely eliminated. A Chapter 7 case is usually over in a few short months, with the discharge order being entered around 4 months after your case is filed. It can go a little faster, but can also take a bit longer depending on your personal circumstances. A Chapter 13 case is a case where you reorganize your debt, into a repayment plan. The plan will include proposed repayment to all of your creditors, including unsecured creditors. This does not mean you will have to pay back all of your credit cards and other unsecured debt, as most Chapter 13 plans provide for repayment of only a small percentage of your unsecured balance (sometimes as low as 0.00 or 1.00%). With all of these differences, you might be wondering what the requirements are to file each type of case.

One of the biggest questions about what is required to file a Chapter 13 is if there is a minimum amount of debt to qualify. The answer is no, but there are other requirements that have to do with your financial picture, such as:

         How much of your debt is secured vs. unsecured?
         What is your income level, for the past 6 months?
         What amount of your income is being devoted to repayment of secured debts?
So while you do not have to have a certain amount of debt to file a Chapter 13 bankruptcy, you do have to know the details of your income and expenses. The rules on bankruptcy were changed in 2005, requiring those that file to first undergo a financial calculation. The test is called the means test, and it measures how much of your income is left after you pay your secured debts each month. Depending on the answer, you will be able to file either a Chapter 7 or a Chapter 13 case. The calculation is complicated, but we know what goes into it and can get it done for you properly. If you file a case with an improper means test result, your case may not make it through the Court. Let us help you file a case correctly, so you don’t have to worry about doing it over or answering complex legal questions about your paperwork.

If you have more questions about bankruptcy, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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