Chapter 13 Debt Limits
Generally speaking, if your general unsecured debts are above $465,275.00 and your secured debts are above $1,395,875.00 you will not be eligible for Chapter 13 Bankruptcy relief. These limits are subject to being changed every three years. If Chapter 7 is not an available remedy for your financial situation and you do not qualify for filing for Chapter 13 protection the only alternative is usually to file a Chapter 11 petition which is many times more time-consuming and can be exponentially more expensive than a Chapter 13 case.
In order to qualify for a Chapter 13 bankruptcy, your general unsecured and secured debts cannot individually exceed the specific, above referred to limits set for them by bankruptcy law. 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 accidents or other personal injury claims. Contingent 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, therefore it is contingent and why it does not count toward the Chapter 13 debt limits. While you are expected to list all unliquidated debts in your bankruptcy papers, they do not count toward the chapter 13 debt limits because the amount owed is not firmly established.
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 with an experienced bankruptcy practitioner. 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 can increase your unsecured debt and decrease your secured debt leaving you eligible for Chapter 13 relief.
If You Still Do Not Qualify
If strategies such as removing a lien or part of a lien from your secured property does not sufficiently allow you to decrease your secured debts under the limits, you still may have other options you can consider with an experienced bankruptcy practitioner. For example, "a Chapter 20 bankruptcy" is a two-step strategy that allows you to deal with your debts in Bankruptcy Court. What is meant by a "Chapter 20 bankruptcy", is that you must first file for a Chapter 7 bankruptcy case, which will allow you to wipe out all of your unsecured debts, which then allows you to meet the Chapter 13 debt limits (since your unsecured debts will have all been discharged). 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, but depending on your strategy you may not need another discharge. Your strategy in filing a subsequent Chapter 13 bankruptcy may be to give you additional time to catch up on arrears owed to one or more secured creditors, or to pay back priority creditors or other non-dischargeable debts that you cannot afford to pay at once.
Before you proceed with any of these steps, however, you should first consult with a skilled, experienced bankruptcy attorney to ensure you are calculating all of your debts the right way and 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 your unique financial burdens. Mr. Alster will take the time to discuss every alternative possible with you to ensure that you fully understand what options are 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 try to go through this difficult situation on your own.