Bankruptcy – by the Numbers
Chapter 7 (straight bankruptcy)
A restriction on wages, called the means test, limits the availability of chapter 7 or straight bankruptcy. The numbers change periodically. If your income is more than the current limit, you must prove your expenses are within the national and local norms. If your expenses are too high, then only chapter 13 or 11 is available.
The current California figures are:
1 Earner–$49,182
2 Earners–$65,097
3 Earners–$70,684
4 Earners–$79,971
Chapter 13 (wage earner’s plan)
There are restrictions on the unsecured and secured debt amounts. If you owe more than these amounts then you cannot file. The limits are less than $336,900 for unsecured and less than $1,010,650 for secured debts. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.
Chapter 11 (reorganization)
If you cannot file under either of the above, then only Chapter 11 remains. This filing is significantly more complex and expensive in comparison to chapters 7 or 13. A corporation or partnership is usually a chapter 11 debtor but an individual also can use it.