Do I Qualify for Chapter 7 or Chapter 13 Bankruptcy?

This article is part of a comprehensive guide to bankruptcy in Oregon. Go here to read the guide and see related articles.

The two most common types of bankruptcy for people who have more debt than they can handle are called Chapter 7 and Chapter 13. Each has a different way of helping people manage or get rid of debt.

To learn more about how these two types work, read our article comparing the two.

Each also has limits and requirements for who can use that type of bankruptcy. This article explains those requirements so you can see whether either would work for your situation. 

Chapter 7: Based on your income

Chapter 7 bankruptcy helps erase most types of debt, but it's only available if your income is low enough to qualify.

To see if you qualify, the court uses something called the means test. The test compares your income to the median income for a household your size in Oregon. This means that half of Oregon households that size earn more than that amount, and half earn less.

• If your income is below the limit, you pass the test and can file for Chapter 7.
• If your income is above the limit, you may still qualify, but you'll need to show that you don't have money left over after paying basic living costs.

How it works:

1. Add up all the money you made (your total income) over the last 6 full months (not including the month you're filing).
2. Multiply that number by 2 to get your annual income.
3. Compare your annual income to the Oregon median for your household size. Find the most recent income limits on this U.S. Trustee Means Testing website.   

If your income is too high, you might not qualify for Chapter 7, but Chapter 13 may still be an option.

You can try this means test calculator to see if you qualify.

Chapter 13: Based on Your Total Debt

There's no income limit for Chapter 13, but there is a limit on how much debt you can have. The limits are based on two types of debt: secured debt and unsecured debt. 

• Secured debt is a loan that's tied to something you own, like a car or a house. If you don't make payments, the lender can take that property to get their money back.
• Unsecured debt is debt that isn't tied to something that can be taken back. This includes things like like credit cards, medical bills, and personal loans.

To use Chapter 13 bankruptcy:

• Your total unsecured debt must be less than $465,275.
• Your total secured debt must be less than $1,580,125.

To qualify, you must also:

• Be up to date with credit counseling (within 180 days before filing).
• Not have had a previous bankruptcy dismissed in the last 180 days for certain reasons (like not following court orders).

For more information

If you’re not sure which one fits your situation, talk to a legal aid lawyer or credit counselor. They can help you figure out your next step. 

• Contact the Oregon State Bar's Lawyer Referral Service to find a bankruptcy lawyer and receive a low-cost consultation.
• You can also read this article to learn more about how to hire a lawyer. 

If you can't afford a lawyer, you may be able to get free or low-cost help:

• Consider Legal Aid's Pro Bono Bankruptcy Clinic, which can provide free legal help and advice.
• Find other low-cost and free legal services in our Legal Directory.

Before navigating the bankruptcy process by yourself, consider reading the U.S. Bankruptcy Court's guide to filing for bankruptcy without an attorney.

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