Debtor with $700,000 in Student Loans Was Not Eligible to file Chapter 13 Since Debts Exceeded Limits Under 11 U.S.C. §109(e)

Debtor with $700,000 in Student Loans Was Not Eligible to file Chapter 13 Since Debts Exceeded Limits Under 11 U.S.C. §109(e)

Debtor wants to be a chapter 13 debtor and use her future income to repay her substantial debts through a court-approved plan. Under 11 U.S.C. §109(e), only an individual with non-contingent, liquidated, unsecured debts of less $394,725 can be a chapter 13 debtor. The Debtor’s student loan debts alone exceed that amount. When she filed her chapter 13 petition, the Debtor’s unsecured debts totaled more than $870,000, an amount that is more than double section 109(e)’s debt limit.

The trustee objected that the proposed plan failed to pay all of Debtor’s disposable income to her unsecured creditors, as required by section 1325(b)(1)(B). The trustee also questioned whether Debtor was eligible to be a chapter 13 debtor given the amount of her student loan debts.

After the trustee’s objection, the Debtor filed an amended plan and schedules. The
amendments addressed some of the technical concerns, but not Bailey-Pfeiffer’s eligibility to be
a chapter 13 debtor. In fact, the amended schedules showed even higher unsecured debts, with
her student loan debt increasing to $700,000

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