The option of Chapter 13 bankruptcy, also referred to as a wage earner’s plan, is available to people who have a steady source of income. It can assist them in rearranging their debts and coming up with a reasonable payback schedule. However, before filing for Chapter 13 there are several requirements.
Regular income
To qualify for Chapter 13 bankruptcy, you must have a reliable source of income to fund your repayment plan. This can include wages, salary, self-employment income, rental income, or other regular sources of income. The court will assess your ability to make monthly payments towards your debts.
Debt limits
There are debt limits for Chapter 13 bankruptcy. Secured debts (such as mortgages and car loans) must be less than $1,257,850, and your unsecured debts (such as credit card debt and medical bills) must be less than $419,275. If your debts exceed these limits, you may not be eligible for Chapter 13 bankruptcy.
Financial management course
Before filing for Chapter 13 bankruptcy, you must complete a court-approved credit counseling course. Additionally, you must attend a financial management course after filing. These courses can educate individuals on budgeting, money management, and responsible financial behavior.
Previous bankruptcies
If you have filed for bankruptcy in the past, there are limitations on when you can file again. For Chapter 13 bankruptcy, you must wait at least two years from the date of a previous Chapter 13 discharge or four years from the date of a previous Chapter 7 discharge.
Determining if you should file for Chapter 13 bankruptcy can be a stressful decision. However, when you understand the requirements, it can be easier to handle.
