Chapter 13 bankruptcy is open only to individuals - not companies - who have "regular income" and whose secured and unsecured debts each fall under a dollar ceiling that Congress adjusts periodically. If you're a wage earner, a retiree, or a sole proprietor with debts you can't keep up with, you may qualify, as long as your total secured debt (like a mortgage or car loan) and your total unsecured debt (like credit cards or medical bills) each stay under the current statutory limits. Because those limits change, this article explains how the framework works rather than quoting a number that could be outdated by the time you read it.
Who can actually file Chapter 13
Chapter 13 is built around a simple idea: someone with steady income repays creditors over time - usually three to five years - instead of liquidating assets. Under 11 U.S.C. § 109(e), only an individual (or a married couple filing jointly) with "regular income" is eligible. That income doesn't have to come from a traditional job. Courts have accepted wages, self-employment earnings, Social Security or disability benefits, pensions, alimony, and rental income, as long as it's steady enough to reasonably fund a repayment plan.
A sole proprietor - someone running a business under their own name or a DBA, with no separate corporate or LLC structure - can file Chapter 13. Legally, a sole proprietorship isn't a separate entity from its owner, so the business's debts and the owner's personal debts are combined into one Chapter 13 case, and both count toward the eligibility ceilings described below.
Why businesses can't file Chapter 13
Corporations, LLCs, and partnerships cannot file Chapter 13 as entities, no matter how small they are. Chapter 13 is written into the Bankruptcy Code specifically as a wage-earner and individual-debtor tool, built around personal income and a personal repayment budget - it has no mechanism for corporate governance, shareholder interests, or business reorganization. Businesses that need bankruptcy relief typically use:
Chapter 7 - liquidation of the business's assets, often ending its operations.
Chapter 11 - reorganization, which can be used by businesses of any size, or by individuals whose debts are too large for Chapter 13.
Subchapter V of Chapter 11 - a streamlined reorganization track created for smaller businesses (and eligible individuals with business debt), generally faster and less expensive than standard Chapter 11.
If you own an incorporated business that's struggling, your personal Chapter 13 eligibility depends on your own individual debts (including any debts you personally guaranteed), not the business's separate liabilities - but the business itself would need a different chapter if it needs bankruptcy protection.
How the debt limits work - and why we won't quote a number
Congress sets two separate debt ceilings for Chapter 13: one for secured debt and one for unsecured debt. Mortgages, car loans, and other debts backed by collateral count toward the secured ceiling; credit cards, medical bills, personal loans, and most other unpaid balances count toward the unsecured ceiling. If either total is over its ceiling on the day you file, you're not eligible for Chapter 13 - even if the other total is well under its limit.
Those ceilings are not fixed forever. Section 104 of the Bankruptcy Code requires the dollar amounts in a number of provisions, including the Chapter 13 debt limits, to be recalculated every three years based on the Consumer Price Index, and the figures have also been changed directly by Congress from time to time - including a temporary law, enacted in 2022, that combined the two ceilings into a single, higher limit before that provision expired in 2024 and the ceilings reverted to being calculated separately. In short: the numbers move, sometimes more than once in the same decade, and using a stale figure could lead you to think you qualify when you don't, or vice versa.
Because of that, don't rely on a number from an old article, a search-engine snippet, or even something you read a year or two ago. Before you file, confirm the current secured and unsecured debt ceilings directly from the source:
uscourts.gov - the federal judiciary's bankruptcy pages publish the current dollar amounts and explain the adjustment schedule.
The Bankruptcy Code itself, 11 U.S.C. § 109(e) and § 104, available through govinfo.gov or the U.S. Code site, if you want the statutory language.
The DOJ U.S. Trustee Program at justice.gov/ust for related figures like means-test income data, which matters more for Chapter 7 eligibility but can affect how much you must pay in a Chapter 13 plan.
What to do: checking your own eligibility
List every debt and tag it secured or unsecured. Secured debt is backed by collateral (house, car, some business equipment); unsecured is not (most credit cards, medical bills, personal loans, many old repossession deficiencies).
Add up each category separately. If you're a sole proprietor, include business debts in your personal totals - they're not walled off.
Look up the current ceilings at uscourts.gov before comparing your totals against them. Don't trust a number you saw elsewhere without a recent date attached.
Confirm you have regular income steady enough to realistically fund a three-to-five-year repayment plan.
Complete credit counseling from a U.S. Trustee-approved agency in the window before you file - this is a hard requirement, and skipping it or doing it too early or late can delay or derail your case. The approved-agency list is on the U.S. Trustee's site.
Talk to a bankruptcy attorney to confirm eligibility and pick the right chapter, especially if your numbers are close to the ceilings, you have significant business debts, or you've filed bankruptcy before recently (prior filings can affect the automatic stay).
If you're over the limits
Being over the Chapter 13 ceiling doesn't mean you're out of options. Many people in that situation move to Chapter 11, including Subchapter V if they qualify as a small business or as an individual with business debt. It's a more complex and typically more expensive process, which is another reason to get an attorney's read on your specific numbers early rather than assuming either way.
A note on scams and cheap "shortcuts"
If you're behind on bills, you've probably been targeted by ads for debt-settlement or debt-relief companies promising to erase your debt for a fee, or by non-attorney "petition preparers" offering cheap bankruptcy paperwork. Many debt-settlement programs charge large upfront fees, can tank your credit further while you wait, and don't offer the legal protections - like the automatic stay - that bankruptcy provides. Non-attorney petition preparers are legally allowed to type your forms, but they cannot give you legal advice, and doing so is illegal; mistakes on eligibility, exemptions, or debt classification can cost you your case or your property. If cost is the barrier, look into legal aid organizations, law-school bankruptcy clinics, your local bankruptcy court's self-help resources, and free or low-cost credit counseling from a U.S. Trustee-approved agency before turning to a for-profit "debt relief" company.
For the fuller picture of how a Chapter 13 case works once you're eligible - the repayment plan, what happens to your house and car, and how long it lasts - see our companion guide, Chapter 13 Bankruptcy Explained.
This article is general information, not legal advice, and reading it doesn't create an attorney-client relationship. Bankruptcy eligibility rules and dollar limits change, and mistakes about which chapter fits your situation can be costly - talk to a qualified bankruptcy attorney or a U.S. Trustee-approved credit counselor about your specific numbers before you file.
Frequently asked questions
Can a small business file Chapter 13?
Not as a business entity. Chapter 13 under 11 U.S.C. § 109(e) is limited to individuals (including married couples filing jointly) with regular income. A corporation, LLC, or partnership cannot file Chapter 13 on its own. A sole proprietor, however, is not legally separate from the business, so that person can file Chapter 13 as an individual - their business debts and assets just get folded into the personal case.
What counts as 'regular income' for Chapter 13?
It's broader than a paycheck. Wages, self-employment earnings, retirement or disability benefits, alimony, rental income, and other steady or recurring income can qualify, as long as it's regular and stable enough to fund a repayment plan, typically over three to five years. There's no fixed minimum dollar amount - the question courts ask is whether the income is sufficiently stable and predictable to support a plan.
What happens if my debts are over the Chapter 13 limits?
You're not barred from bankruptcy - you're just not eligible for Chapter 13. Most people in that situation look at Chapter 11, including the Subchapter V track designed for smaller businesses and individuals with business debt, which can be faster and cheaper than standard Chapter 11. An attorney can help you figure out which chapter fits your numbers.
Do the Chapter 13 debt limits include my mortgage?
Yes. A home mortgage is typically secured debt and counts toward the secured-debt ceiling, along with car loans and other debts backed by collateral. Credit cards, medical bills, and most personal loans are typically unsecured and count toward the separate unsecured-debt ceiling. Because a mortgage balance alone can be substantial, it's worth checking the current ceilings at uscourts.gov rather than assuming you're under or over.
Does filing Chapter 13 use the same 'means test' as Chapter 7?
No. The means test (comparing your income to your state's median) is primarily a Chapter 7 tool used to decide whether someone should be steered toward Chapter 13 instead. For Chapter 13 itself, the debt ceilings and the regular-income requirement are what determine basic eligibility, though your income and expenses still shape how much you must pay creditors in your plan. Current means-test income figures are published by the DOJ U.S. Trustee Program at justice.gov/ust.
This article is general legal information, not legal advice, and may not reflect the most current law or the law in your jurisdiction. Laws vary by state and change over time. For advice about your specific situation, consult a licensed attorney.
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