Yes, it is possible to have too much debt for Chapter 13 but those are unusual cases.  Unlike Chapter 7 cases, with no limit on the debt that can be discharged, Chapter 13 does have limits. Congress thought the process may be too cumbersome if an individual comes in with too much debt and they did not want the cases to get too close to a Chapter 11 business reorganization.  The current debt limit for Chapter 13 is $383,175 in unsecured debt and $1,149,525 in secured debt. The number is adjusted periodically, and is significantly higher than the original limits of $100,000 unsecured and $350,000 secured debts back in the 1970’s.  One important note about the limits is that if you owe more on your home than it is worth the debt counts as secured debt up to the value of the home and the remaining portion of the loan counts as unsecured.

Although relatively few individuals seeking Bankruptcy protection are over the Chapter 13 limits, it does happen.  For example, a business owner may have personally guaranteed business debt or own a nicer home that was purchased when the economy was thriving.  I recently met with a person who had been pursuing a doctorate for quite some time and student loans themselves were almost at the unsecured debt limits.  What does a person do if they are over the Chapter 13 debt limits?  The first option is to explore whether a Chapter 7 case can be filed, either because of the business debt or under the Means Test.  For others with that much debt, an individual Chapter 11 case may be the best option.  Although it is more expensive than a Chapter 13, and it is important to see a lawyer who does Chapter 11 cases (very few volume consumer firms do), the expenses are usually far outweighed by the benefits.  I recently filed an individual Chapter 11 case for a homeowner who had significant equity in his home.  We were able to market the house for over a year in the Chapter 11 case.   The lawyers and firms in the Georgia Bankruptcy Lawyers Network are experienced in all Chapters of Bankruptcy.  Contact us to set up a meeting, or to get a referral to a good lawyer in your area.