Thursday, December 13, 2012

Can I File a Chapter 13 Bankruptcy: Who Can File?

So, after speaking with some attorneys (not your bar buddy that professes he knows the law) and doing some research, you believe a chapter 13 bankruptcy is what you need in order to achieve the relief you looking for. So now the BIG question is, “Am I eligible?”

That's right. Not just anyone can file a chapter 13. First, only an individual (or unincorporated business) can be a debtor in a chapter 13. This precludes a corporation or partnership from filing this chapter of bankruptcy; they may have to look at either a chapter 7 or chapter 11.

Secondly, this chapter of bankruptcy requires you have regular income. How this income is defined changes from one jurisdiction to another, but for the purpose of this discussion, we will presume you have a job that pays you on a regular basis, or you have bills paid for you on a regular basis. That's right, if someone else is paying you bills on a regular basis, this will be considered income an may help you in your filing of your bankruptcy.

Next, we need to look at your level of debt. Did you know you can actually have too much debt to be able to file bankruptcy. According to section 109(e), your unsecured debts must be less than $360,475, and your secured debts must be less than $1,081,400. I know what you are thinking...where in the world did they ever come up with these numbers? These numbers are actually based on the consumer price index, and change periodically.

Some other things you should consider include whether you have previously filed a chapter 13. That is, if you previously filed a chapter 13 bankruptcy, how long to you have to wait in before being able to file another chapter 13 bankruptcy?  An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e).

And just like filing a chapter 7, an individual must have received credit counseling from an approved credit counseling agency, either in an individual or group briefing, within 180 days before filing. See 11 U.S.C. §§ 109, 111. (Note: there are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling.)

So, there is a little more to filing an chapter 13 bankruptcy than you thought, isn't there? If you are thinking of filing a Chapter 13 (especially a chapter 13), you should seek the advise of a competent bankruptcy attorney in your area. Many attorneys offer free consults for people contemplating bankruptcy.


  1. Hey there! Keep it up! This is a good read. I will be looking forward to visit your page again and for your other posts as well. Thank you for sharing your thoughts about bankruptcy. I am glad to stop by your site and know more about bankruptcy.
    The realisation of funds usually comes from two main sources: the bankrupt's assets and the bankrupt's wages. There are certain assets that are protected, referred to as "protected assets". These include household furniture and appliances, tools of the trade and vehicles up to a certain value. All other assets of value will be sold. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.
    Know more about Chapter 13 Bankruptcy.

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  2. Jackie, Thanks for the feedback!

    If you wish to follow my blog, feel free to enter your email in the "Subscribe Me :)" box in the right side of the page. I do NOT use these email address for anything, it is just a Google thing for notifying you of blog updates.

    For those reading, please note exemptions may change from state to state, depending on whether your state is an "opt out" state, or not. Also, the particular statutes of your state may be interpreted according to case law, which, of course, may change from state to state.

    You should seek the advise of a bankruptcy attorney in your area. When it comes to details such as this, I would also suggest finding out if the attorney is a member of a local bankruptcy bar association (if there is one), the National Association of Consumer Bankruptcy Attorneys, etc. When dealing with exemptions, in many cases, we are talking about much more than simply filling out a form.

    Jackie, thanks again for the kind comment.

  3. Make sure you monitor the activities of your lawyer while your bankruptcy case is pending. You should be aware of what is going on and not be afraid to pick-up the phone and ask. Law offices that are busy are known to make occasional errors.
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  4. Most of us wait to file bankruptcy thinking that our situation will change for the better soon but that is normally not the case. has a good article and a help illustration on Medical Bankruptcy.