How Much Debt Can You Have to File Chapter 7?
Chapter 7 bankruptcy is one of the two main chapters of consumer bankruptcy; the other is Chapter 13. In order to file Chapter 7 bankruptcy, you must qualify according to a process known as the means test. If your income is too high to file Chapter 7, you may have to file Chapter 13 instead. Various financial limits apply to both Chapter 7 and Chapter 13 bankruptcy.
Unsecured Debt Limit
Unsecured debt refers to money you owe that is not secured by any specific collateral. Debt such as credit card debt or general personal loans fall into this category. Under Chapter 7, you can have any amount of unsecured debt and still file. If you are forced into a Chapter 13 bankruptcy, your unsecured debt limit would be $336,900 according to NOLO.
Secured Debt Limit
Secured debt is debt collateralized by specific property, such as a car, electronics, home furnishings or a house. As with unsecured debt, there are no secured debt limits in a Chapter 7 bankruptcy. According to NOLO, if you must file a Chapter 13 bankruptcy, your secured debt limit will be $1,010,650.
Annual Limit
In order to qualify to file Chapter 7 bankruptcy, your income must be below your state's median income for a family of your size. If your income is over the median, your case may be dismissed or you may be forced into filing a Chapter 13 petition instead.
Disposable Income Limit
In addition to the median income test, your Chapter 7 petition may be dismissed if you show a large amount of monthly disposable income. If you can still afford to make payments to your creditors in a Chapter 13 bankruptcy plan, the court may find your Chapter 7 abusive and may dismiss it.
Asset Limit
While there are no debt limits to a Chapter 7 bankruptcy, you may have to surrender any valuable assets you have. Each state provides debtors with a list of exemptions that they can use to protect property. Anything worth more than the exemption level must be surrendered to the court for liquidation. Any money raised from non-exempt assets will go to pay your creditors.
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