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Chapter 13 Debt Limits

Generally speaking, if your general unsecured debts are less than $394,725 and your secured debts are less than $1,184,200, you will be eligible for relief under a Chapter 13 bankruptcy. These limits are subject to being changed every three years.

In order to qualify for a Chapter 13 bankruptcy, your general unsecured and secured debts cannot exceed the above referred to limits set by bankruptcy law. If the total amount of your non-contingent, liquidated debts exceed these limits, you will not be eligible to file for a Chapter 13 bankruptcy relief. However, do not be discouraged if, at a glance, it appears that your debts far exceed these limits; it is important to keep in mind that not all of your debts will necessarily be included in counting against these limits - it is entirely possible that you might still be eligible to file under this particular chapter if part of your debts are disputed, contingent or not liquidated. An unliquidated debt is a debt in which your responsibility to pay has yet to be determined, or where the amount cannot be readily determined. This tends to involve accident claims or other personal injury claims. Contingency debts are debts that you are not obligated to pay unless a certain event occurs. If the event never takes place, you will never be expected to pay it, which is why it does not count toward the debt limit.

Reviewing and Categorizing Your Debts and Figuring Out What Doesn’t Count

As you weigh your options, it is crucial to take the time to review and categorize your debts. This will help you understand whether or not you will be eligible for Chapter 13 relief. Through this process, you might realize that some of your debts do not count toward debt limits, for example you might be able to divide certain secured debts into secured and unsecured portions, which will increase your unsecured debt and decrease your secured debt leaving you eligible for Chapter 13 relief.

You are expected to list your contingent and unliquidated debts in your bankruptcy papers, but they do not count toward the chapter 13 debt limits because the amount owed are either disputed or not firmly established.

If You Still Do Not Qualify

If strategies such as removing a lien or part of a lien from a secured property in bankruptcy does not help you decrease your secured debt enough to stay under the limits, you will have to consider other options. For example, a Chapter 20 bankruptcy is a two-step strategy that allows you to deal with your debts in bankruptcy court. To proceed with a Chapter 20 bankruptcy, you must first file for a Chapter 7, which will wipe out your unsecured debts, which might then allow you to meet the Chapter 13 debt limits. Of course, you will not get a discharge at the end of your Chapter 13 bankruptcy since you already received one in the Chapter 7 within the previous four years.

That said, a Chapter 13 bankruptcy will give you additional time to catch up on secured debt or non-dischargeable debt that you cannot afford to pay at once. It can also allow you to cram down or strip off liens.

Before you proceed with any of these steps, however, you should first consult with a skilled, experienced bankruptcy attorney to ensure you are on the right path toward a better financial future. Bankruptcy laws can be incredibly complex and intricate and a lot is at stake, so make sure you take the time to seek the legal help you need to get you through this undoubtedly difficult time.

Bankruptcy Attorney in Hackensack

If you are considering filing for a Chapter 13 bankruptcy, first consult with a skilled and experienced bankruptcy attorney in Hackensack. At The Law Offices of Marc G. Alster, Mr. Alster and his knowledgeable staff take a personal approach with every client to ensure the best strategy is used for solving their unique financial burdens. He will take the time to discuss every alternative possible with you to ensure that you fully understand what is available to you and how each one will affect your future.

Get started on your path toward debt relief and contact Mr. Alster at (201) 878-4630 to schedule your free initial case evaluation. You should not have to go through this difficult situation on your own.

Categories: Bankruptcy

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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