Am I Eligible for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy helps people with regular income reorganize debts through a three-to-five-year repayment plan. Eligibility depends on your income level, debt amounts, and financial situation. You may be eligible for Chapter 13 bankruptcy if you have regular income and your secured and unsecured debts fall within the limits set by federal bankruptcy law.

At Pelley Law Office, we help Plano families evaluate Chapter 13 bankruptcy options. Richard Pelley’s experience as a former bankruptcy trustee gives him unique insight into eligibility requirements.

Basic Chapter 13 Eligibility Requirements

To file Chapter 13, you must meet several criteria:

• Regular Income: You must have a predictable income from employment, self-employment, retirement benefits, Social Security, disability payments, or other reliable sources. Income must cover monthly plan payments and necessary living expenses.
• Debt Limits: Your debts cannot exceed federal limits under 11 U.S.C. § 109(e). As of April 1, 2025, the limits are:

1. • Secured debts: under $1,580,125 (mortgages, car loans, etc.)
   • Unsecured debts: under $526,700 (credit cards, medical bills, personal loans)

• Tax Filings: You must have filed tax returns for the past four years.
• Credit Counseling: Complete credit counseling within 180 days before filing, as required under 11 U.S.C. § 109(h).
• Dismissal Restrictions: You cannot have had a bankruptcy dismissed in the last 180 days for willfully failing to appear.

Our Plano bankruptcy lawyers carefully evaluate eligibility before filing to avoid delays or dismissal.

Income Requirements and Disposable Income

“Regular income” is broader than traditional employment. Acceptable sources include:

• Wages or salaries
• Self-employment profits
• Social Security or retirement benefits
• Disability payments
• Rental property income

The court calculates your disposable income, which is your income minus reasonable expenses, to determine your monthly plan payment amount. Chapter 13 repayment length is determined by comparing your income to Texas median income figures under federal bankruptcy guidelines.

Texas uses means test calculations comparing your income to state median income figures.

• Below the Texas median income: typically qualifies for a three-year repayment plan
• Above the Texas median income: usually requires a five-year plan

We help maximize allowable expenses within legal guidelines, including housing, utilities, transportation, food, healthcare, and other necessities, potentially lowering your required monthly payments. The court must approve your proposed budget as reasonable for your area.

When Chapter 13 Makes Sense

Chapter 13 is ideal in situations where:

• Foreclosure Prevention: Catch up on missed mortgage payments and keep your home.
• Car Repossession Protection: Repay through the plan and keep your vehicle.
• Income Too High for Chapter 7: Still need debt relief despite earning above Chapter 7 limits.
• Tax Debt Management: Include tax obligations in your repayment plan.
• Co-Debtor Protection: Shields family or friends who co-signed loans from collections.
• Non-Exempt Property: Allows you to retain property that might otherwise be liquidated.

Our Plano bankruptcy attorneys help families decide if Chapter 13 is the most effective strategy for their financial situation.

Schedule Your Free Consultation with Our Texas Bankruptcy Attorney

Chapter 13 eligibility depends on income, debt levels, and your specific financial circumstances. If you have regular income and want to keep your home or car while repaying debts, Chapter 13 may be your best option. At Pelley Law Office, we evaluate your qualification status and explain all alternatives clearly.

Our Plano bankruptcy team has helped thousands of Texas families through Chapter 13 reorganization. We understand the requirements and prepare cases for success. Call us at (214) 560-1919 or contact us online for a free consultation today.

Contact Our Texas Bankruptcy Law Firm For Help Today

If you’re facing bankruptcy in Texas, we’re here to help. Contact the experienced bankruptcy lawyers at Pelley Law Office, L.L.P., today to schedule a free consultation.

We proudly serve Plano, Dallas, Sherman, and the surrounding areas.

Pelley Law Office L.L.P. – Plano Office
Address: 1312 14th St, Plano, TX 75074
Phone: (972) 608-0335
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.0180322,-96.6952916,863

Pelley Law Office L.L.P. – Sherman Office

Address: 905 N Travis St, Sherman, TX 75090
Phone: (903) 813-4778
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.6445846,-96.6113141,857