Qualifying for a Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a type of reorganization bankruptcy that can help people in the San Francisco Bay area who are struggling with large amounts of debt but still have a steady source of income. Although not as popular as its sister, Chapter 7 Bankruptcy, Chapter 13 can be a great tool for debtors who have important assets, such as a home or car, which they do not want to risk losing.

Who Can File for Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is only available for individuals and married couples. This distinguishes it from Chapter 7, which is available to both individuals and corporations.

Having recently filed for bankruptcy can make an individual ineligible for Chapter 13. If you have had debts discharged in a Chapter 13 Bankruptcy within the last two years, you are not eligible to file for Chapter 13. Likewise, if you have had debts discharged in a Chapter 7 Bankruptcy within the last four years, you are ineligible for Chapter 13.

You are also ineligible for Chapter 13 if you have filed a bankruptcy petition within the last 180 days that was dismissed because you:

  • Violated a court order;
  • Failed to appear before the court;
  • Requested that the case be dismissed because a creditor asked the court to lift the automatic stay; or
  • Filed fraudulent paperwork with the court.

An additional limitation is that Chapter 13 Bankruptcy is only available to individuals with less than $1,149,525 in secured debts and unsecured debts of less than $383,175. Secured debts are debts, like a home mortgage, which are secured by a property interest. Unsecured debts, like credit card debt, are not secured by any property interest.

Sufficient Disposable Income

In order to file for Chapter 13, a debtor must have a steady source of disposable income. This income must be sufficient to pay a significant portion of debts during either a three-year or five-year payment plan. If you do not have sufficient income and your creditors would receive more money in a Chapter 7 Bankruptcy, you may not be eligible for Chapter 13.

Tax Returns

Chapter 13 Bankruptcy requires individuals to file a great deal of documentation with the bankruptcy court. In addition the bankruptcy forms which disclose your assets and debts, you must also provide proof that you have filed state and federal income tax returns in each of the previous four years.

Credit Counseling

In order to qualify for Chapter 13, a debtor must satisfy a credit counseling requirement. Credit counseling must be with an approved agency, and must have occurred at least 180 days prior to the filing of the bankruptcy petition.

Contact the Law Offices of Melanie Tavare

Determining whether you are eligible for Chapter 13 can be a complex process. In this sense, Chapter 13 Bankruptcy is more complicated than Chapter 7, because there is no simple “means test” that applies. A mistake regarding eligibility can result in dismissal of your bankruptcy case, which can be time-consuming and costly. This is why it is important to consult with an attorney who can advise you throughout the Chapter 13 process. The Law Offices of Melanie Tavare have years of experience helping individuals reorganize their finances and get rid of their debt through Chapter 13 Bankruptcy. If you are considering filing for Chapter 13, contact us online or by calling 510-255-4646.

The Law Offices of Melanie Tavare are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.