It is certainly possible to have too much disposable income to qualify for chapter 7 bankruptcy thanks to the means test. Is it also possible to have too much debt to then file for chapter 13 bankruptcy? Often referred to as a wage earner’s plan, chapter 13 bankruptcy enables individuals earning a living but hampered by excessive debt to develop a repayment plan for all or part of their debts. In many cases, the repayment plan involves a drastic reduction of debt. Often debts are repaid at far less than 100%, with unsecured debt, such as credit card debt, frequently paid back at pennies on the dollar. The amount of money a chapter 13 debtor will pay back to creditors is determined by how much disposable income they have left each month after expenses.  

Too Much Debt to File For Chapter 13?

 Any individual, even if self-employed is eligible for Chapter 13 relief as long as their unsecured debts (such as credit card debt and medical bills) are less than $360,475.00 and secured debts (such as mortgages and car loans) are less than $1,081,400.00. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership is not eligible to file for chapter 13 bankruptcy. If your debts exceed these thresholds it is likely that you will have to file for chapter 11 protection. If you have questions about the bankruptcy process, consult a bankruptcy attorney.

See Also:

Underwater on a second mortgage? Consider Modifying in bankruptcy to lower payments

How to force your lender to lower car payments

Modifying a chapter 13 plan after confirmation can be challenging