Qualifying For Chapter 13 And How To Decide If You Should File

Filing for bankruptcy is one way to get out of debt, but is it the right option for you? As you consider your choices, you might want to think about using Chapter 13. Before you can use this branch, you must make sure you meet all of the qualifications. After ensuring you meet those, you might want to think about whether you should use this branch. Here is a list of the criteria you must meet to qualify for this branch and tips to determine if you should.

You Need Steady Income

The first requirement is income. You must have steady, reliable income to use this branch. Steady income is required because you must repay your debts through a repayment plan in a Chapter 13 case. If you do not have enough income, you might not be able to repay your debts. Therefore, you must prove your income and have enough to repay all your debts.

You Need Your Tax Returns

To file a Chapter 13 case, you must also have your last couple of tax returns filed and available. Your lawyer uses these to verify your income, and they need these to meet the legal requirements of bankruptcy. If you have not filed yours, you must do so before filing a Chapter 13 case.

You Cannot Have Too Much Debt

The law also has debt requirements you must meet. To use Chapter 13, you cannot have more than $394,725 in unsecured debts. You also cannot have more than $1,184,200 in secured debts. If you have more debt than these amounts, you will not qualify for Chapter 13.

You Cannot Have Recent Filings

The next requirement involves recent bankruptcy filings. If you filed for Chapter 13 within the past two years, you are not eligible to file until after those two years are done. Also, if you filed for Chapter 7 in the last four years, you are not eligible. You also cannot have a dismissed bankruptcy case on your record for the past 180 days.

How to Know if You Should File

Now that you understand the requirements, you might wonder how to know if you should file. The best way to know is by meeting with a bankruptcy attorney. The attorney can review your financial situation to see if Chapter 13 is the right choice. The attorney will likely decide by examining your debts to see what types you have. You can learn more by meeting with a lawyer.

Read more about filing for Chapter 13 by talking to a local bankruptcy lawyer.