Have you missed a couple of car payments and your home is about to be placed into foreclosure? Are you struggling to pay your living expenses and wondering how you will make ends meet next month? If you are in this position, you are not alone. Millions of Americans face these same questions each day as they struggle to find an affordable solution to their debt problems.
Some people have too much debt because they do not have any funds left over after paying living expenses at the end of each paycheck. On the other hand, other people may believe they have too much debt but they do have some disposable income just not nearly enough to pay all of their bills. In both situations, filing a bankruptcy case may be the best solution.
Can You Have Too Much Debt to File Bankruptcy?
Bankruptcy law is divided into various chapters:
- Chapter 7 is a liquidation bankruptcy for individuals and businesses
- Chapter 13 is a reorganization bankruptcy for individuals
- Chapter 11 is a reorganization for businesses and some individuals
- Chapter 12 is for family farmers and fisherman
- Chapter 15 is for is for debtors with interests in foreign countries
- Chapter 9 is used for municipalities (i.e. the Detroit, MI bankruptcy case)
Most individuals file under either Chapter 7 or Chapter 13 of the bankruptcy code. Each bankruptcy chapter has its own statutes setting forth the law governing that chapter of bankruptcy. The statutes also contain the requirements that the debtor must meet in order to qualify for a discharge under that specific chapter.
For example, to file under Chapter 7 of the Bankruptcy Code, the debtor must meet the income requirements of the Means Test. If you have too much income, you will not be eligible for a discharge if you file a Chapter 7 case. On the other hand, there is no such thing as “too much debt” to file Chapter 7. A Chapter 13 case is somewhat different.
To be eligible to file a under Chapter 13 of the Bankruptcy Code, you must have sufficient disposable income to fund a Chapter 13 plan. The amount of your bankruptcy plan payments are based on several factors including your income, expenses, debts, assets, and financial history. Your plan payment may be very small or very large depending on your circumstances. However, you can have too much debt to qualify to file under Chapter 13.
The unsecured debt limit (i.e. credit cards, medical bills, etc.) for a Chapter 13 case is currently $383,175. The secured debt limit (i.e. mortgages, car loans, etc.) for a Chapter 13 case is currently $1,149,525. 11 U.S.C. §109(e) of the Bankruptcy Code sets the debt limits for Chapter 13 cases; however, these amounts are adjusted every three years. The next adjustment is scheduled to take effect on April 1, 2016.
What Can I do if I Have Too Much Debt for a Chapter 13 Case?
Individuals who do not meet the debt limits for a Chapter 13 case may be able to file a Chapter 7 case or a Chapter 11 case. They should consult with my office to discuss the available bankruptcy and non-bankruptcy options to resolve their debt problems.
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable Payment Plans
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm focused on Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, debt consolidation, credit repair, tax liens, student loans, and foreclosure. We represent clients in Burlington County and throughout South Jersey.
Contact our office at 609-267-5297 to schedule your free consultation to discuss bankruptcy and non-bankruptcy alternatives. You may also use our convenient online contact form and one of our friendly, professional staff members will contact you to answer your bankruptcy questions and/or schedule a free consultation with Travis J. Richards.
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