Borders Group, Inc., owners of the popular Borders bookstores recently filed for Chapter 11 bankruptcy protection. You may be thinking, good for them, but I am going to be filing Chapter 7 or Chapter 13. The reality for many of our clients, they simply do not qualify for Chapter 7 or Chapter 13. For many higher income clients, Chapter 7 is not an option because of the means test. Without considering all of the possibilities, in general, individuals with higher incomes often do not qualify for Chapter 7. For many of them, Chapter 13 is the logical choice.

However, because of 11 USC 109(e), people sometimes do not qualify for Chapter 13 either. 109(e) contains limits on the type and amount of debt you can have and still be eligible for Chapter 13. As of this article, the current limits are $360,475 of unsecured debt and $1,081,400 of secured debt (you do not have to count debts that are contingent or unliquidated in this calculation). Many of the same clients who make too much money to qualify for Chapter 7, are also the ones who were able to borrow in excess of these limits. The result? Often these individuals have to consider a more complicated and costly Chapter 11 case as an individual.

These clients have to play by many of the same rules that Borders will be playing by in its Chapter 11 case. In our practice we have seen a steady increase in the number of individual Chapter 11 cases that are being filed. If you have substantial debt, you should speak to a knowledgeable bankruptcy attorney about your options. Please visit us at to learn more.