When it comes to bankruptcy, Chapter 13 is the second most common filing behind Chapter 7, according to a leading bankruptcy lawyer.
What is Chapter 13?
It lets you sort out your finances while protecting you from creditor harassment and wage garnishment at the same time.
One eligibility requirement is that you must have enough income to propose a payment plan that the court will approve. Other requirements are:
- You must be an individual and not a business entity
- You cannot have a prior petition dismissed within the last 180 days
- Your unsecured debts must be less than $383,175 and secured debts less than $1,144,525
- Your must keep your income tax filing current
- You must keep up with child support and alimony payments if applicable
- You must file yearly income and expense reports
You case starts once your attorney files a petition with the bankruptcy court and you pay the filing fee.
The court will appoint a trustee that will make sure you file your income tax return and that your repayment plan follows the law.
The Repayment Plan
Chapter 13 requires you to pay certain debts in full. They are known as priority debts and include child support and some tax obligations. Your repayment plan will lay out how you will pay each debt and how much you will pay.
How Will Your Case End?
As soon as you finish your repayment plan, any remaining debts that are eligible for discharge will be forgiven. However, before the judge can sign off on a discharge, you need to prove that you completed an approved budget counseling course and are current on alimony and child support if you are responsible for such payments.
The decision to file bankruptcy should not be taken lightly, and because of the complicated nature of the process, you need a team of bankruptcy lawyer on your side. If you would like to learn more about filing for Chapter 13, please contact us today.