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Are you eligible for Chapter 13?

Three is the magic number in Chapter 13 bankruptcy eligibility. The requirements are:

  • Individuality. Corporations need not apply.
  • Regular income, hence the nickname "wage earner's plan."
  • Being under the allowed debt limits. As of April 2004, it's $290,525 of unsecured debts -- such as credit card debt and medical bills, not tied to an asset -- and $871,550 of secured debt -- those tied to an asset that can be repossessed or foreclosed upon, such as a house or car. The limits change April 1 each year.

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Additionally, in some cases Chapter 7 bankruptcy filers may be forced to choose Chapter 13 instead. Under a bankruptcy code known as an abusive filing, surplus income can cause a Chapter 7 case to be dismissed or converted to a Chapter 13, explains attorney Michael J. O'Connor, who has handled thousands of bankruptcy cases.

-- Posted: Sept. 20, 2004
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2004 Debt Guide
30 yr fixed mtg 3.65%
15 yr fixed mtg 2.78%
5/1 jumbo ARM 3.81%
See Also
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Can you borrow from your home equity?

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