Law

Do You Qualify for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a viable alternative for many debtors. It includes measures that allow someone with a regular income to return some creditors more diminutive than the whole amount owing while maintaining all of their assets, such as their homes and cars. However, not everyone qualifies. Learn more about Chapter 13 bankruptcy, including who is eligible to petition and who is not.

Don’t know what to expect from a bankruptcy filing? Seek counsel from a bankruptcy attorney in Hagerstown, MD, to exercise your rights effectively.

Chapter 13 bankruptcy eligibility

This chapter has the advantage of allowing you to return some, but not all, of your debts over three to five years. However, before the court can “confirm” (accept) your plan, you must complete the proper bankruptcy papers and demonstrate that you are:

  • up-to-date with tax returns
  • within the bounds of the debt limit
  • if you’re employed and earning enough money to pay your rent, and
  • an individual, not a corporation (although a sole proprietor’s bankruptcy covers all financial aspects of the business).

Why File for Chapter 13 Bankruptcy?

Many people prefer Chapter 7 bankruptcy because it eliminates the need to repay creditors. Some debtors, on the other hand, are just ineligible. Others, on the other hand, select Chapter 13 bankruptcy because it offers possibilities that Chapter 7 bankruptcy does not, making it the superior option.

A debtor may file a Chapter 13 case for a variety of reasons, including the following:

  • The debtor whose income exceeds the means test threshold for Chapter 7 can’t be discharged, and their qualifying debts must be eliminated.
  • Overdue mortgage payments can be paid off over three to five years, and a homeowner can keep their home (this also applies to unpaid car payments).
  • In a repayment plan, a debtor can pay off a tax bill, overdue support obligation, or other non-dischargeable obligation and avoid collection actions like wage garnishment.
  • Debtors are entitled to keep non-exempt property that would typically be sold in a Chapter 7 bankruptcy (but they have to refinance the nonexempt portion within a three- to five-year repayment plan).

Filing for Chapter 13 Bankruptcy

When you file for bankruptcy, you will provide information about all your financial affairs, such as income, expenses, assets, creditors, and past transactions.

Once you file the required documents, you will receive a case number and submit an application fee and proof of credit counseling completion. Chapter 13 repayment plans must be filed within fourteen days unless the court extends your deadline.

Related Articles

Back to top button