Individuals with Significant Nonexempt Assets And Debts Above Statutory Limits

The Bankruptcy Code exempts certain property – called “exempt property” – from liquidation under a Chapter 7 bankruptcy, and from certain other requirements judicial supervision in other chapters of the Bankruptcy Code.  These exemptions often allow debtors to file for a Chapter 7 liquidation without surrendering much or any of their property.

Many individuals with significant nonexempt assets, however, may choose not to liquidate those assets in a Chapter 7 bankruptcy even if they qualify for a Chapter 7 bankruptcy case.  These individuals may instead make payments to their creditors over time in a Chapter 13 or Chapter 11 bankruptcy case.  If their debts exceed $360,475 in unsecured debt or $1,081,400 in secured debt, they are not eligible for a Chapter 13 bankruptcy.  (These figures will be adjusted April 1, 2013.)

For these individuals, the only bankruptcy options are liquidation under Chapter 7 and reorganization under Chapter 11.  Their situation is similar to that of individuals with above-median income and debts above statutory limits.