If you are drowning in debt, you might be looking at Chapter 13 bankruptcy as an option to get collectors off your back. There are many advantages to filing Chapter 13 over Chapter 7. Some of the top benefits include that you are allowed to keep your property and you have a three-to-five-year window to repay your debts. However, not everyone will qualify for this option.

Learn more about who is eligible to file for Chapter 13 bankruptcy and what criteria they must meet.

You are not a business

Businesses are not able to file Chapter 13. Only individuals and their spouses are eligible to apply. Instead, businesses should consider filing Chapter 11.

You haven’t filed another recent bankruptcy

If you filed Chapter 13 bankruptcy in the past two years or Chapter 7 within the past four years, you cannot file Chapter 13.

You did not have a previous bankruptcy dismissed within 180 days

If you had a previous bankruptcy dismissed for the following reasons, you are not eligible to file for Chapter 13 bankruptcy:

  • You willfully violated a court order or failed to appear before the court.
  • You requested that the court dismiss the case after a creditor asked the court to lift an automatic stay.

You took a credit counseling class

You must take a court-approved credit counseling class at least 180 days before filing for Chapter 13 bankruptcy. You will need to show the court a certificate of completion.

Your debts are within a certain range

To be eligible to file Chapter 13 bankruptcy, your unsecured debt must be less than $419,275. This can include credit card debt and medical bills. Your bills must also be less than $1,257,850 in secured debt. Secured debt is the property that the creditor can take away if your debts are not paid.

You are current on your tax returns

You will need to provide proof of filing both your state and federal income tax returns from the previous four years to file Chapter 13 bankruptcy. You will need to provide your court-appointed trustee copies of your returns.

You will repay all required debts

When filing Chapter 13 bankruptcy, you will need to submit a plan to repay certain debts in full. These can include your priority debts and secured debts. Your priority debts can include unsecured debts like child support, spousal support, and taxes. Some secured debts can include your mortgage or car loan.

You can repay unsecured creditors

Your unsecured creditors may also receive repayments. You must prove that you can repay them at least the amount equal in value to their nonexempt property over the life of the repayment plan. Some examples of unsecured debt can include furniture or jewelry.

You have enough income to repay your debts

When you file Chapter 7 you will need to prove your income is too low to repay your debts. In contrast, in Chapter 13 your income will need to meet a certain threshold. You must show that you make enough money to repay your debt obligations, after deducting your allowable expenses. You must also have enough to pay your trustee a commission based on a percentage of payments in your payment plan. You can include a spouse’s income, Social Security benefits, and unemployment benefits, as well.

Contact a Chapter 13 Bankruptcy attorney

If you are sitting on mounds of debt and want to file for Chapter 13 bankruptcy, it’s crucial to hire an experienced attorney to help you through the process and get the money you are owed. Don’t let debt ruin your life. Call (405) 529-9377 for a free case review.

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