Only an individual with regular income can file Chapter 13 bankruptcy, and only if their debts fall below set dollar limits, their recent tax returns are filed, they’ve completed a pre-filing credit counseling session, and no prior bankruptcy blocks them from refiling or receiving a discharge. Businesses organized as corporations, LLCs, or partnerships cannot use Chapter 13 at all. The rules below walk through each requirement so you can tell whether you qualify before you spend money on a filing fee or an attorney.
Individuals Only, Not Business Entities
The bankruptcy code restricts Chapter 13 to natural persons.1Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor No corporation, LLC, or partnership can file under this chapter, regardless of size. Businesses that need to reorganize debts generally have to use Chapter 11, which is more complex and more expensive.
A sole proprietor is treated as the same legal person as the business, so if you run one you can bring both personal and business debts into a single Chapter 13 case. Married couples can file a joint petition and pay only one set of filing fees.2United States Courts. Chapter 13 – Bankruptcy Basics
Two categories of individuals are excluded even though they’re natural persons: stockbrokers and commodity brokers. The statute bars them from Chapter 13 no matter how well they otherwise fit the eligibility requirements.
Debt Limits
Your total debts on the day you file must be under the statutory caps. Between June 2022 and June 2024, a temporary law (the Bankruptcy Threshold Adjustment and Technical Corrections Act) allowed a single combined debt limit of $2,750,000 covering both secured and unsecured obligations. That provision expired on June 21, 2024, and the law reverted to two separate caps.3United States Bankruptcy Court. Bankruptcy Threshold Adjustment and Technical Corrections (BTATC) Act Expired
Under the current rules, your unsecured debts (credit cards, medical bills, personal loans) must be less than $526,700, and your secured debts (mortgages, car loans) must be less than $1,580,125.2United States Courts. Chapter 13 – Bankruptcy Basics The caps apply only to debts with a fixed dollar amount that don’t depend on a future event to become owed. If you’re over either threshold, Chapter 11 is the usual alternative. The Judicial Conference adjusts these figures periodically, so confirm the current numbers before you file.
Regular Income
Chapter 13 is sometimes called the “wage earner’s plan,” but the income requirement is broader than that label suggests. You need funds stable enough to make monthly payments to a trustee for three to five years. Wages qualify, and so do Social Security benefits, disability payments, pensions, rental income, and regular contributions from a family member. What matters is reliability and sufficiency, not the source.1Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
Self-employed filers face more scrutiny because their income fluctuates. Expect to produce bank statements, tax returns, and profit-and-loss statements showing that earnings are consistent enough to support the plan you’re proposing.
How Your Income Sets the Plan Length
Eligibility to file is one question; whether your plan will work is another, and your income relative to your state’s median decides how long you’ll be paying. If your household income is below the median for your state and household size, your plan runs three years (you can propose up to five). If your income is at or above the median, the plan must run five years.4Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
The comparison uses your “current monthly income,” which is your average monthly income over the six months before filing, multiplied by twelve. The U.S. Trustee Program publishes the median income figures and provides Official Form 122C-1 for the calculation.5United States Department of Justice. Means Testing A second form (122C-2) then works out your “disposable income” after allowed living expenses, secured debt payments, and priority obligations like child support and taxes. That disposable income figure is essentially the minimum you must pay unsecured creditors each month through the plan. You can end the plan early by paying all unsecured claims in full before the commitment period runs.4Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
Credit Counseling Before You File
Before your petition can be filed, you must complete a credit counseling session with a nonprofit agency approved by the U.S. Trustee Program (or the Bankruptcy Administrator in Alabama and North Carolina).6United States Department of Justice. Credit Counseling and Debtor Education Information The session has to fall within the 180 days before your filing date and must include a budget analysis.7Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor It can be done by phone or online. You’ll receive a certificate to submit with your petition, and without it your case can be dismissed.
A narrow emergency exception applies if you can show the court that urgent circumstances required an immediate filing and you tried but couldn’t get a counseling appointment within seven days. That temporary waiver lasts 30 days, with a possible 15-day extension for good cause, so you’d still have to complete the session soon after.7Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor Separate waivers exist for people who can’t complete the requirement because of disability, mental illness, or active military service in a combat zone.
A second course, on personal financial management, is required after filing but before you can receive your discharge. The certificate of completion must reach the court no later than the date of your last plan payment or the date you file a motion for discharge.8United States Bankruptcy Court. Financial Management Course Requirement Joint filers must each complete it separately.
Tax Returns Must Be Current
You must have filed all required federal tax returns for the four tax years before your bankruptcy filing.9Internal Revenue Service. Understanding Federal Tax Obligations During Chapter 13 Bankruptcy A missing return from any of those years gives the trustee grounds to seek dismissal. You’ll also have to give the Chapter 13 trustee a copy of your most recent federal tax return, or a transcript, at least seven days before the first meeting of creditors.10United States Department of Justice. Section 341 Meeting of Creditors
The trustee uses these returns to verify the income and expense figures in your bankruptcy forms, calculate any priority tax debts that must be paid in full through the plan, and check for inconsistencies. If your returns and your bankruptcy schedules don’t match, expect questions.
Recent Bankruptcy History
Two separate rules limit filers who’ve been through the system recently, and they work differently.
The first is a hard bar on filing at all. If a case of yours was dismissed within the past 180 days because you willfully failed to obey court orders, failed to appear, or voluntarily dismissed the case after a creditor moved to lift the automatic stay, you can’t file a new case until that 180 days runs out.7Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
The second is a waiting period on receiving a discharge. You can still file, and the automatic stay protections still apply, but you won’t come out with debts wiped clean if a prior discharge is too recent:
- After a Chapter 7, 11, or 12 discharge, you must wait four years from the filing date of the earlier case to receive a Chapter 13 discharge.11Office of the Law Revision Counsel. 11 US Code 1328 – Discharge
- After a prior Chapter 13 discharge, the waiting period is two years from the filing date of the earlier case.11Office of the Law Revision Counsel. 11 US Code 1328 – Discharge
The clock runs from the filing date of the earlier case to the date the court enters the order for relief in the new case. In a voluntary filing that order is entered the day you file, so in practice you’re measuring filing date to filing date.
Putting the Pieces Together
If you’re an individual (or a married couple filing jointly), your unsecured and secured debts are under the statutory caps, you have reliable income of any type sufficient to fund a three-to-five-year plan, you’ve filed the last four years of tax returns, you complete the credit counseling session in the 180 days before you file, and no prior case blocks you from filing or from receiving a discharge, you meet the eligibility rules for Chapter 13. Whether Chapter 13 is the right tool for your situation is a separate question, but these are the gates you have to pass through to use it.