Prohibited from filing Ch 7 if Equity/Asset Value/Secured Debt over $1mil?

[Madeline415]

I live in CA and in 2009, I consulted with a BK attorney. I have something in my notes about my not being eligible to file Ch 7 because (at that time) I had over $1mil in secured debt.

Someone I just spoke to today in WI said their attorney told him that he could not quality for Ch 7 because he simply had debt of over $1mi.

Does anyone know what the rule is re Ch 7 eligibility and debt or asset value?

[tobee43]

it could vary state by state however, from what i recall there is no minimum, at least not in a chapter 7 cases, but in chapter 13 cases you cannot have over $300,000 (approximately) in unsecured debt (e.g., credit cards, medical bills, payday loans, etc.) or over $1,000,000 (approximately) in secured debts (e.g., mortgages, car loans, boat loans, etc.).

someone i'm certain will chime in and correct me if i'm wrong. i know also i have seen an max of 337k in some states, so again, it may vary.

[despritfreya]

There is no debt limit (max or min) as it relates to a 7. I have many clients with debt in excess of 1 mil. As TB points out, debt limits apply in Chapter 13 cases. Nor is there a limit as to the amount of assets. In fact, the more assets one has the happier a Trustee will be since there will be more to liquidate and that is how the Trustee makes a living. (Folks with a lot of non-exempt assets tend not to file 7s as they do not want to lose the assets to a Trustee.)

Des.

[btbeme]

Ch 7 - limitation is set by income and disposable income, not debt. Ch 13 is limited by debt, which is currently $360,475 unsecured and $1,081,400 secured. Exceed either or both thresholds for a 7 or 13 and a Ch 11 (expensive) is in your future.