Both Chapeter 13 and Chapeter 7 bankruptcy have suitability needs which can forestall people from being able to file under that actual chapter. The most widely recognized being the mean-test requirement under Chapter 7. Essentially if an individual earns above a certain quantity, that person won't be suitable for Chapter 7 protection, and may only have eligibility to file for Chapter 13. Unlike Chapter 7 nonetheless , Chapter 13 has debt restrictions which have increasingly caused more and more people to not be accepted to file.
Section 109 (e) of the Bankruptcy code places limitations on the amount of debt that an individual could have so as to file for Chapter 13. In order to be suitable to file for Chapter 13, an individual must have less than $360,475 of unsecured debt, and must have less than $1,081,400 of secured debt. Since these numbers on first look appear particularly high, many of our customers are often shocked when they discover that they won't be qualified because they exceed those debt limits.
Why more and more of our customers are having issues with exceeding the debt restrictions of 109 (e) is because of the shortage of equity in their houses. The collapse of the housing market hit Southwest Florida as tough as anywhere else in the country. A direct result of the housing market collapse is that many folks in Southwest Florida now owe more on their home than it is worth. The amount that a householder is underwater on their home counts towards the $360,475 unsecured debt limit. Also , if a homeowner is underwater on their first loan and they've also got a 2nd mortgage, that complete second mortgage would be considered unsecured. Since so many homeowners are underwater on their houses, many of them are finding out that they'd surpass the unsecured debt limit regardless of if their other debt is low.
Current Florida cases have eased these limitations a bit at least for married debtors who file jointly. In In Re Scholz and In re Hannon the bankruptcy court held that married people can ?stack ? their debt limits so long as each partner would be in a position to file his or her own individual Chapter 13. In In Re Scholz, a married couple filed a Chapter 13 petition with $386,221.31 of unsecured debt and the Chapter 13 Trustee moved to dismiss the argument for surpassing the unsecured debt limitation. The Judge overruled the Trustee?s objection and permitted the couple to continue with their joint Chapter 13 because as individuals, each debtor was below the $360,475 limit. It was only when their debt was combined that they surpassed the debt limits. If debtors who are married are each able to file individual Chapter 13 Petitions, they may file a joint Chapter 13 petition in spite of a combined debt total which surpasses the 109 (e) limits.
See In re Scholz, no. 6:10-bk-08466-ABB (Bankr. M.D. Fla. 2011) and In re Hannon, 23 Fla. L. Weekly Fed. B132 (Bankr. S.D. Fla. 2011).
Tag: Bankruptcy Attorney Fort Myers
Jonathan Bierfeld is an attorney with Martin Law Firm, P.L, whose practice focuses in Insolvency Law and Civil Legal action. He?s admitted to practice law in the State of Florida and the Federal Court for the Middle District of Florida. He essentially practices in Lee County Florida in Cape Coral and Fort Myers, Florida. If you are searching for a Fort Myers Bankruptcy attorney, Jonathan can be contacted via via his website at www.martinlawfirm.com.
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