What are the requirements for chapter 13 bankruptcy?
Chapter 13 bankruptcy, also known as a wage earner’s plan, is a form of bankruptcy that allows individuals with a regular income to reorganize their debts and pay them off over a period of three to five years. If you are considering filing for chapter 13 bankruptcy, it is important to understand the requirements that must be met in order to qualify. This article will outline the key requirements for chapter 13 bankruptcy, helping you determine if this option is right for you.
Eligibility Criteria
The first requirement for chapter 13 bankruptcy is eligibility. To qualify, you must meet the following criteria:
1.
Be an individual
Chapter 13 bankruptcy is only available to individuals, not businesses or partnerships. If you are a sole proprietor or a partner in a partnership, you must file as an individual.
2.
Have a regular income
You must have a regular source of income, such as a job or self-employment, to be eligible for chapter 13 bankruptcy. This income can be from wages, salary, self-employment, or any other source.
3.
Pass the means test
The means test is a financial assessment used to determine if you have the ability to repay your debts. If your income is below the median income for your state, you automatically pass the means test. If your income is above the median, you must subtract certain allowable expenses from your income to determine if you have disposable income available to pay your creditors.
4.
Not have filed for chapter 13 bankruptcy within the past two years
If you have previously filed for chapter 13 bankruptcy, you must wait at least two years before filing again.
Debt Limits
Another requirement for chapter 13 bankruptcy is that your debts must not exceed certain limits. As of 2021, the debt limits are as follows:
1.
Unsecured debts
Unsecured debts, such as credit card debt, medical bills, and personal loans, cannot exceed $419,275.
2.
Secured debts
Secured debts, such as mortgages and car loans, cannot exceed $1,257,850.
Creating a Repayment Plan
One of the most important requirements for chapter 13 bankruptcy is the creation of a repayment plan. This plan must be submitted to the bankruptcy court and must meet the following criteria:
1.
Include all unsecured and priority debts
Your repayment plan must include all unsecured debts, such as credit card debt and medical bills, as well as priority debts, such as taxes and child support.
2.
Be feasible
The plan must be realistic and provide a reasonable repayment schedule that you can afford.
3.
Be approved by the bankruptcy court
The bankruptcy court must approve your repayment plan before it can be implemented.
Conclusion
Understanding the requirements for chapter 13 bankruptcy is crucial if you are considering this option to reorganize your debts. By meeting the eligibility criteria, debt limits, and creating a feasible repayment plan, you can successfully navigate the bankruptcy process and achieve financial stability. If you believe you may qualify for chapter 13 bankruptcy, it is advisable to consult with a bankruptcy attorney to ensure that you meet all the necessary requirements and to guide you through the process.
