How Do I know if I Qualify for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy cases are intended for individuals not businesses. But such individuals must qualify based on the size of their income as well as some other factors. In order to qualify for Chapter 13, you will have to show the bankruptcy court that you will have sufficient  income, after deducting certain allowed expenses and required payments on secured debts (such as a auto loan or home mortgage), to make the repayment obligations which the court will impose via a payment plan.


The following sources can be deemed as income for purposes of determining if you qualify:


  • regular wages or salary
  • income from self-employment
  • wages from seasonal work
  • commissions from sales or other work
  • pension payments
  • Social Security benefits
  • disability or workers’ compensation benefits
  • unemployment benefits, strike benefits, and other forms of benefits
  • public benefits such as welfare payments
  • child support or alimony you receive
  • royalties and rents, and
  • proceeds from selling property, especially if selling property is your primary business.


While your income must be high enough to qualify (or otherwise Chapter 7 bankruptcy may be a better option), it is also important that your debts are not too high. You cannot qualify for Chapter 13 bankruptcy if your secured debts exceed $1,149,525, a figure which will be adjusted subsequently for inflation. Furthermore, your unsecured debts cannot exceed $383,175.


In order to perform the calculation for whether you qualify, you should consult with a local bankruptcy attorney.  (For specific items of information necessary to make the calculation in many cases, see our subsequent blog post on the topic.)


Keep in mind that you have to file all federal tax returns that are due as of the date of filing in order to proceed in Chapter 13. In addition, you must go to a course regarding credit counseling and provide a certificate that you completed such a program within 180 days of filing.  It is not a bar that you have filed bankruptcy in the past but it must be more than two years ago since your last Chapter 13 bankruptcy was dismissed, and more than 4 years since a case under Chapter 7, 11 or 12 was dismissed.


In Albuquerque, Giddens & Gatton Law, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to disposition of property in Chapter 7, Chapter 11 and Chapter 13 cases.. The New Mexico firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment or visit the firm’s website at Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.