Level of Debt for Personal Bankruptcy

Total Debt

Chapter 12 and Chapter 13 are the only bankruptcy chapters in which one of the requirements for eligibility is a limited amount of debt. If you want to file for Chapter 7, your debts are not limited by any amount, but you must pass income tests that show that your income is low enough to necessitate bankruptcy. The amount of debt you are allowed to have to file for any bankruptcy chapter is divided into two different categories: secured debts and unsecured debts. Secured debts are those backed by some type of collateral; mortgages and car loans are examples. Unsecured debts are the opposite of secured debts, and are not backed by any type of collateral. The limit for secured debt is usually higher than for unsecured debt.

If you want to file for Chapter 13, you must first make sure that your debt levels are within the amounts allowed by the Bankruptcy Code. As of 2011, you are eligible to file for Chapter 13 if the total amount of unsecured debt you have does not exceed $360,475 and the total amount of secured debt you have does not exceed $1,081,400. You are allowed to have both types of debt to file for Chapter 13, but the total amount of debt between both types may not exceed $1,441,875. Another requirement of filing for Chapter 13 is that you must receive credit counseling from an approved agency within 180 days before you file your petition.

The first requirement of filing for Chapter 12 bankruptcy protection is that you or your company must be in the farming or fishing business. You also cannot exceed the debt limits. As of 2011, you can only file for Chapter 12 if the total amount of debt you have, including secured and unsecured debts, does not exceed $3,792,650 if you have a farming operation or $1,757,475 if you have a commercial fishing operation. If the debtor is a corporation or partnership, the same limits that apply to an individual apply to the total debt of the company.

Although in general a Chapter 11 filing does not require a limited amount of debt from its debtors, the Bankruptcy Code has an exception to the rule. If a small business is filing for Chapter 11, it must pass a test that determines whether it qualifies as a small business. This test requires that the total amount of secured and unsecured debt cannot exceed $2,190,000 in 2011.