Q: What are the rules for bankruptcy as to what you owe?

A: This is a pretty open-ended question. There are two types of bankruptcy typically used by individuals/couples: Chapter 7 and Chapter 13.

In Chapter 7 bankruptcy, there is no limit on the amount of debt involved, though there is a calculation, called the means test, that is applied to determine whether a person really needs to file bankruptcy or whether he could reasonably pay his debts. Chapter 7 is usually used by people who have a lot of unsecured debts like credit card debt and medical bills, rather than secured debts like home mortgages and car loans. Some types of debt cannot be discharged, such as child support, some taxes and student loans.

Chapter 13 bankruptcy creates a payment plan over a period of 3-5 years, though some debt may be discharged at the end of the plan. This is a more popular option for those with assets they want to keep or with property such as homes and cars that serves as collateral for their debts.

In Chapter 13, there is an upper limit on debt, but it's high enough that it doesn't affect most people who want to file unless there is an expensive home in play. The current limit is $383,175 in unsecured debt and $1,149,525 in secured debt.

*Kevin Chern is Managing Partner of UpRight Law, a national law firm with licensed attorneys providing bankruptcy and consumer legal services in all 50 states. He is an Illinois licensed attorney with 21 years of federal consumer bankruptcy and consumer protection law experience. This response is for informational purposes only and is not intended to be legal advice. For legal advice, consult an attorney licensed in your state with the appropriate expertise.