While chapter 13 bankruptcy can be a great option for many debtors, there is a specific set of requirements that you must meet in order to be eligible for filing the petition. Here are a few major filing requirements that you must meet Chapter 13 eligibility criteria.
Chapter 13 Eligibility Criteria
- The first and most important criterion is that Chapter 13 bankruptcy can be filed only by individuals and not by any businesses entity. For instance, if you own a business, you can file a chapter 13 in lieu of only your personal liabilities and not business debts.
- You must be able to prove in a bankruptcy court that you will have sufficient income (even after deducting the payment expenses towards secured debts) to meet all your repayment obligations. The court will most certainly disapprove of an individual’s petition, if he/she does not have a stable income, as in this case, the plan will not be feasible.
- Your debt must not be too high. For instance, you will not be eligible for filing a chapter 13 if your unsecured debt exceeds $394,725 and your secured debt is more than $1,184,200. This threshold amount is adjusted periodically for inflation. While your unsecured debts include your medical bills, income taxes, personal loans, credit card debt, student loan and so on, your mortgage and vehicle loans fall under the category of secured debts.
- If you have discharged a previous debt by means of a chapter 13 bankruptcy within the last two years or a chapter 7 bankruptcy within the last four years, you will not qualify for filing another chapter 13 unless the aforementioned time frame has elapsed.
Most importantly, your proposed chapter 13 plan must include a feasible schedule for repaying all the required debts known as the priority or secured debts in full. Find debt relief and protect assets with the help of a professional. Our team of experienced bankruptcy attorneys in Sacramento will guide you every step of the way.
Categorized in: Chapter 13