How Can I Know If I Qualify For a Chapter 13 Bankruptcy?

When considering bankruptcy, it is natural to ask yourself if you qualify.  And while there are two types of bankruptcy, here we will focus on Chapter 13 bankruptcy.  One of the nice things about Chapter 13 bankruptcy is that there is no maximum income requirement.  However, there are several major criteria that you must meet.

The following list outlines the most important requirements but is not comprehensive.

• Your debt must be below a certain threshold.  In California, the limit for unsecured debts (i.e. credit cards, student loans, taxes, medical bills, personal loans, etc.) is $419,275 and the limit for secured debts (i.e. vehicle loans and mortgages) is $1,257,850.  These figures are adjusted from time to time due to inflation.
• The next requirement you must meet is that you must be filing as an individual and not as a business entity (a sole proprietor is fine).  Chapter 13 bankruptcy is not designed for and does not discharge debts of business entities.  However, you can still file for Chapter 13 bankruptcy personally even if you own a business.  In this case, you would qualify based only on your personal liabilities.
• If you attempt to file a Chapter 13 bankruptcy, you will have to prove to the court that you have enough income to meet your repayment obligations.  If you don’t have a stable income, the court will most likely reject your payment plan.  Consistent income is key here.
• The court will reject your petition to file a Chapter 13 if in the last two years, you have gotten rid of debt through a Chapter 13 bankruptcy or in the last four years through a Chapter 7.  You will have to wait until you meet these timeline requirements to file anew.

If you meet these requirements or want to look at your other options in bankruptcy, contact your local Yuba City bankruptcy attorney at (530) 797-4402.