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You may qualify for Chapter 13 bankruptcy if you are an individual with regular income, your debts fall below the federal limits, and you can afford a court-approved repayment plan. You must also meet filing, counseling, tax, and good-faith requirements.
Chapter 13 can allow you to reorganize your debts over three to five years while keeping property that might otherwise be at risk. However, qualifying to file does not guarantee that the court will approve your proposed plan.
What Are the Current Chapter 13 Debt Limits?
For cases filed on or after April 1, 2025, you must owe less than:
- $526,700 in noncontingent, liquidated unsecured debt
- $1,580,125 in noncontingent, liquidated secured debt
Bankruptcy debt limits are adjusted periodically, so the filing date matters.
Secured debts are backed by collateral, such as a mortgage or vehicle loan. Unsecured debts generally include credit cards, medical bills, and personal loans that are not tied to specific property. “Liquidated” means the debt amount can be determined, while “noncontingent” means your obligation to pay does not depend on a future event.
Who Can File for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is available to individuals and married couples, not corporations, partnerships, or limited liability companies. You must have regular income, which may come from wages, self-employment, Social Security, retirement benefits, rental income, or another dependable source.
A business owner may file personally and include qualifying business-related debts for which they are individually liable. The business itself cannot file under Chapter 13. Depending on how the business is organized and what it owes, another option such as business bankruptcy may be more appropriate.
How Much Income Do You Need for a Chapter 13 Plan?
There is no single minimum income requirement. You need enough reliable income to cover ordinary living expenses, ongoing secured payments, and the required Chapter 13 plan payment.
The plan may need to address mortgage arrears, vehicle debt, recent taxes, domestic support obligations, trustee fees, and other required claims. It must also satisfy rules governing disposable income and how much unsecured creditors receive.
This makes affordability just as important as technical eligibility. If the proposed payment is not realistic, the court may decline to confirm the plan or the case may later be dismissed. We can evaluate your income, expenses, debts, and goals before a case is filed.
What Must You Complete Before Filing?
Most individual filers must complete credit counseling through an approved agency during the 180 days before filing. Limited exceptions apply, but taking the course after filing usually will not correct the problem.
You must also provide information about income, property, expenses, creditors, financial transactions, and other matters. Complete and accurate disclosures help demonstrate that you are filing in good faith. A court may dismiss a case when a debtor conceals assets, misrepresents finances, abuses the bankruptcy process, or proposes a plan in bad faith.
Do Your Tax Returns Need to Be Current?
You generally must file all required federal, state, and local tax returns for the four-year period ending on the petition date. The returns must be provided to the Chapter 13 trustee by the deadline established under bankruptcy law, generally no later than the day before the first scheduled meeting of creditors.
Failure to address missing returns can delay the case, prevent plan confirmation, or lead to dismissal.
Can a Prior Bankruptcy Affect Eligibility?
A previous case can affect either your ability to file or your right to receive a discharge:
- You generally cannot receive a Chapter 13 discharge if you received a Chapter 7, 11, or 12 discharge in a case filed within the previous four years.
- The waiting period is generally two years after a prior Chapter 13 discharge.
- You may be barred from refiling for 180 days if a prior case was dismissed for willfully disobeying a court order or failing to appear, or if you voluntarily dismissed it after a creditor requested relief from the automatic stay.
These rules are fact-specific. Even when a discharge is unavailable, filing may have other consequences that require careful review.
Find Out Whether Chapter 13 Fits Your Texas Debt Situation
Texas exemption laws may protect significant property, including a qualifying homestead, but exemption planning and Chapter 13 affordability must be considered together. Chapter 13 may also help some homeowners catch up on overdue mortgage payments and address a pending foreclosure.
Toronjo & Prosser Law helps individuals and families throughout Dallas-Fort Worth assess their debts, income, property, and prior filings. Contact us for a free consultation and a clear explanation of whether Chapter 13 is available to you.