New Chapter 13 Jurisdictional Limit Case: In re Hannon

The jurisdictional limit for unsecured debt in a chapter 13 is $360,475.00. One way around this limit is to consider the debt separately of a husband and wife who file bankruptcy. Essentially, a joint filing is really two individuals filing a case that is jointly administered. So, for example, if the husband owes $200,000 and the wife owes $250,000 in separate debt, then the court does have chapter 13 jurisdiction.

However, keep in mind that when a debtor has joint debt with the spouse, then this joint debt must be considered as debt when calculating both the husband’s and wife’s debt.

On August 4, 2011, Judge Olson sitting in the Broward County division of the bankruptcy court in the Southern District of Florida, held that debtors could treat separately their debt limit to remain in chapter 13. In re Hannon, 2011 Bankr Lexis 2949, Case No. 10-45771. However, on the facts of this case, the debtor has substantial joint debt which still placed each debtor over the jurisdication limit.

This decision will be of great help to those who file a Fort Lauderdale chapter 13 bankruptcy.

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