Yes, it is possible to have to much debt to qualify for a Chapter 13 bankruptcy discharge.
Individuals with more than $336,900 in unsecured debt and more than $1,010,650 in secured debt are not permitted to proceed under Chapter 13. (numbers current as of April 2009)
If you own more than one home, or if your home is in an expensive real-estate market, it’s not hard to imagine having more than a million dollars of secured debt.
Similarly, if you’ve been hospitalized, been on the receiving end of a judgment, or had large student loans coupled with a period of time living off your credit cards, it’s not hard to imagine having more than $336 in unsecured debt.
If you’re over the limit to file 13, it’s time to sit down with a reputable bankruptcy attorney and determine whether you qualify for a Chapter 7 discharge.
This is a “threading the needle” kind of endeavor. Your will only be able to obtain a Chapter 7 discharge if your income falls within the guidelines established by the US Trustee’s office for households of your same size in your state. Additionally, you must conform your exemptions to those allowed by your state. Remember, in Chapter 7 non-exempt assets can potentially be liquidated by the Trustee to satisfy your creditors.
Look before you leap. Consult with an attorney who will explain this you before you make these decisions that affect your family for years to come.