The requirements for Chapter 13 bankruptcy in California come mostly from federal law: you must be an individual with regular income, your debts must fall under the Bankruptcy Code's limits, you must finish credit counseling before filing, your tax returns must be filed, and a recent prior case can block or delay you. California law then shapes what your plan must pay.
If you already know you need help with mortgage arrears, a garnishment or a pile of unsecured debt, call (415) 754-0115 to schedule a free consultation with Bob Somal, or use our contact page, and have your eligibility checked against your actual numbers.
Six Chapter 13 bankruptcy requirements in California, one by one
Chapter 13 is a repayment bankruptcy. Instead of liquidating property, you propose a plan that lasts three or five years and pays creditors from your future income. Because the court is trusting you to follow through for years, the entry rules are stricter than people expect.
1. You must be an individual (or a married couple)
Only individuals can file Chapter 13. A sole proprietor qualifies because the business is legally the same person as the owner, but an LLC or corporation cannot file its own Chapter 13 case. Spouses may file a joint case.
2. You need regular income
The Code asks for income that is "sufficiently stable and regular" to fund a plan. Wages count, but so do self-employment earnings, Social Security, pensions, rental income and consistent contributions from a household member. What matters is that the money arrives predictably enough to cover the monthly plan payment on top of reasonable living expenses.
3. Your debts must be under the statutory limits
Section 109(e) of the Bankruptcy Code caps the amount of secured and unsecured debt a Chapter 13 filer can have. The limits are adjusted for inflation every three years, and a temporary combined limit that applied for a period has since expired, so it is important to check the figures in effect on the day you file. Only debts that are fixed in amount and not contingent count toward the limits, which is a legal question in itself when a debt is disputed.
4. Credit counseling within the prior 180 days
Before filing, you must complete a credit counseling briefing from a provider approved by the U.S. Trustee Program and file the certificate with your petition. After filing, you take a second course on personal financial management before a discharge can be entered.
5. Tax returns must be filed
You must have filed all federal and state income tax returns required for the four tax years before your case. The trustee will also ask for a copy of your most recent return shortly before the meeting of creditors. Unfiled returns do not always rule you out, but they must be brought current before a plan can be confirmed.
6. No disqualifying prior case
Prior filings matter in two separate ways.
The 180-day bar
If an earlier case was dismissed within the past 180 days because you willfully failed to follow court orders, or you voluntarily dismissed it after a creditor asked for relief from the automatic stay, you generally cannot file again until that period ends.
The discharge timing rules
You may file Chapter 13 soon after a previous case, but you cannot receive a Chapter 13 discharge if you received a Chapter 7 discharge in a case filed within four years before the new one, or a Chapter 13 discharge in a case filed within two years. Some people still file in that window to stop a foreclosure and restructure payments, knowing no discharge will follow.
What the plan itself has to satisfy
Qualifying to file is only the first half. To be confirmed by the bankruptcy judge, a plan must meet several tests.
- Disposable income. Your income over the plan period, after allowed expenses, goes to unsecured creditors. Filers above California's median income for their household size generally face a five-year plan; those below it may propose three years.
- The liquidation test. Unsecured creditors must receive at least what they would have received if your non-exempt property were sold in a Chapter 7 case. This is where California's two exemption systems come in, because the exemptions you choose determine how much equity is protected.
- Priority and secured debts. Recent income taxes and other priority claims must generally be paid in full over the plan, and mortgage or car arrears you want to cure must be included.
- Current support. Domestic support obligations that come due after filing must be kept current.
- Good faith and feasibility. The trustee and the court look at whether the plan is honest and whether your budget can actually carry it.
Our article on how a Chapter 13 repayment plan is structured walks through those payments in more detail.
How an attorney confirms you are eligible
Most eligibility problems are caught before filing, not after. When Bob Somal reviews a potential Chapter 13 case as part of the firm's bankruptcy practice, the review usually covers:
- Six months of income, because current monthly income is based on that look-back period.
- A full list of debts, sorted into secured, priority and general unsecured, to test the debt limits.
- Tax filing status for the last four years, including any missing California returns.
- Every prior bankruptcy case, with filing and dismissal dates.
- Property values and equity, to run the liquidation test under both California exemption systems.
- A realistic household budget, since a plan that fails in month eight helps no one.
The firm represents individuals and small business owners in Pleasanton, Dublin, Livermore, San Ramon, Danville and across Alameda and Contra Costa Counties, and every case starts with a free consultation.
When someone does not qualify for Chapter 13
Falling outside the requirements is not the end of the road. Depending on the facts, an attorney may discuss Chapter 7 if the means test allows it, waiting out a timing bar, bringing tax returns current first, or negotiating directly with creditors. Our comparison of Chapter 7 and Chapter 13 explains the trade-offs.
Frequently asked questions
Can I file Chapter 13 if I am unemployed right now?
You need regular income to fund a plan, so a person with no income source usually cannot propose a confirmable plan. If you are about to start a new job or receive steady benefits, an attorney can look at whether that income is reliable enough.
Does my spouse's income count if only I file?
Generally yes, at least partly. Household income is considered for the means calculation and the budget, although a non-filing spouse's own expenses can be deducted.
Do I have to be current on my mortgage to file?
No. Many people file Chapter 13 precisely because they are behind. The plan can spread the arrears over its term while you resume regular payments.
Is there a minimum amount of debt?
There is no minimum. The Code sets maximums, not minimums, although a case with very little debt may not be the most sensible tool.
If you are unsure whether you meet the Chapter 13 rules, the fastest way to find out is a conversation with an attorney who can see your paperwork. Call The Somal Law Firm at (415) 754-0115 or request your free consultation online; bring recent pay stubs, your tax returns and a list of what you owe, and you will leave with a clear picture of where you stand.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.