A Chapter 13 bankruptcy can help you begin the process of paying down your debt and getting back on the right track. However, it’s not the right type of bankruptcy for everyone. Do you qualify for a Chapter 13? Here are the requirements you need to meet.
You’re Not a Business
A Chapter 13 bankruptcy is an individual bankruptcy — businesses can’t file. If you’re a business and are considering your debt-relief options, a Chapter 11 bankruptcy may be available to you.
You Have a Regular Income
While a Chapter 7 bankruptcy discharges most or all of your debt, a Chapter 13 consolidates it and puts you on a 3-5 year repayment plan. This means you’ll have a single payment to make to the bankruptcy court, and a person called the trustee will divide it up among your creditors according to priority. After the repayment period is over, any debt remaining will be discharged.
To make these monthly payments, it’s important for you to have a steady income. If you don’t have a regular income or otherwise aren’t able to make a monthly payment, you may benefit more from filing a Chapter 7.
Your Debts Aren’t Too High
To file a Chapter 13, you can’t have more debt than you can pay. If your secured debts are $1,010,650.00, you will not be considered eligible. Additionally, your unsecured debts may not exceed $336,900.00. The most total debt you can have to qualify for a Chapter 13 bankruptcy is $1,347,550.00.
You Have Disposable Income
If you make more money than you spend in a month, what is left over is considered “disposable income.” You’ll need some disposable income to be able to file for a Chapter 13. If your bills and other financial obligations exceed what you earn in a month, you have no disposable income and therefore would not be able to make monthly payments towards your debt repayment plan under a Chapter 13 bankruptcy.
Is a Chapter 13 Bankruptcy Right for You? Find Out Now
For many individuals, a Chapter 13 bankruptcy is a great way to stop collection activity immediately and get on a path to a better financial future. To learn more about whether you qualify for a Chapter 13 bankruptcy and if it’s the best option to help you get out of debt, contact Caplan Bankruptcy. Call now at (407) 378-3734.