Who Can File For Chapter 13 Bankruptcy?
If you’re in need of a Bankruptcy filing, then you’re probably looking at a lot of different options. There are several ways to move forward, but not all of them look particularly palatable at first glance. However, from the array of options you have, there’s one that might sound more appealing: Chapter 13 Bankruptcy. It doesn’t cause your property or assets to be liquidated in order to eliminate your debt like Chapter 7 Bankruptcy does, and it lets you restructure your applicable debts. Instead of losing all of your assets, you can keep most of what is yours while you work out a better way to pay for it. It may not be fun – but you won’t end up empty handed as long as you can make good on your new payment plan.
However, there’s much to learn about who can and can’t apply for Chapter 13 Bankruptcy, and there’s a lot of prerequisites – nine total. Let’s look through whether or not you’re qualified to file for Chapter 13 Bankruptcy one prerequisite at a time.
Private Citizens Only, Businesses Need Not Apply
The number one thing to know is that In order to file for Chapter 13 Bankruptcy, you need to be a private citizen. You cannot file on behalf of your business – the Bankruptcy filer must be an actual person. None of the debts covered by the Bankruptcy may be tied to a corporation, an LLC, or a non-profit, or other entity.
You Must Have a Job Capable of Repaying Your Debts
Those without some sort of income cannot file for Chapter 13 Bankruptcy. This means you have to have a stable job that’s capable of providing the kind of revenue you’ll need to pay back your debt after you’ve restructured under Chapter 13 Bankruptcy.
Mandatory Attendance for Credit Counseling
One hundred and eighty days prior to filing, you must seek out assistance via a credit counselor to come up with a plan for managing your debt. There are many established companies that can offer you credit counseling – some of which are even non-profit agencies that can take the sting out of their consultancy fees. Organizations that will counsel you on credit needs can give you certified documents to present in Bankruptcy Court to show that you’ve performed your due diligence before proceedings start.
Specific Secured and Unsecured Debt Limits Must Be Met
In order to file Chapter 13 Bankruptcy, you need to know how much debt you have, and whether those debts are secured debts or unsecured debts. Chapter 13 Bankruptcy allows for no more than $336,900 in unsecured debt (typically comprising of credit card or medical debt) and no more than $1,010,650 in secured debt (comprised of credit extended against collateral).
Have Your Complete Tax Records For the Last Four Years
You’ll need to show the court your tax records from the past four years to show that everything is in order and that you’ve no owed money to either state or federal governments. These types of debts cannot be discharged, and you’ll need to iron any tax debt out before you can proceed with filing for Bankruptcy.
You Must Not Be Barred By Previous Bankruptcies (Kind Of)
It’s not that you can’t have ever have had a Bankruptcy in order to meet this requirement, but you must be clear of any Chapter 7 Bankruptcies by two years, and be clear of any Chapter 13 Bankruptcies by four years. No exceptions.
Must Have No Recent Bankruptcy Dismissals
Much as with previous Bankruptcies, it’s not that you couldn’t have had a case dismissed before, but any dismissed cases must have occurred more than one hundred eighty days prior to filing in order to file again. There are no exceptions to this either and no appeals.
You Must Have a Plan to Repay All Remaining and Applicable Debts
In order to finally make the claim, you must have a repayment plan as drawn up either by your Credit Counselors or a Bankruptcy Attorney. Without a feasible way forward to pay off the debt, a filing will not be accepted.
Your Payment Plan Must Pay a Certain Amount of Unsecured Debt
The amount of unsecured debt you have to pay must meet a particular threshold. Debtors are responsible for repaying nonpriority, unsecured creditors at least an amount equal in value to their nonexempt property over the life of the repayment plan. Nonexempt property usually includes furniture and appliances for the home, lower-end jewelry, and an amount of equity in a vehicle or residence. This is probably the most complicated of the steps, but the folks assisting you with Credit Counseling should be able to assist you in sussing out the details.
That’s a Lot of Stuff to Do. How Do I Address All of This?
You’ll probably need a lot of help getting everything in order – not everyone is equipped to handle everything in a Chapter 13 Bankruptcy filing. But there are people who can help. Some of them will be lower cost, others less so. Three sources, in particular, will provide you with the most valuable assistance.
As noted before, there’s no getting around the Credit Counseling component when filing for Chapter 13 Bankruptcy, and there are many agencies to help you find a repayment plan that will pass muster in Bankruptcy Court. Additionally, these agencies can often assist you in putting your other financial needs in order, and assist you with strategies to repair your credit score post-filing, best practices for budgeting, and general financial education.
Additionally, it helps if you have an accountant who’s worked with you regularly. Services like H&R Block and Jackson Hewitt help millions of taxpayers sort through not just their yearly filing, but with requests for assistance with past claims (some fees may apply depending on your accountant or tax firm). If you’ve filed taxes yourself through systems like TurboTax, you have avenues to assist you with the tax components involved with Chapter 13 Bankruptcy. Both options should be able to retrieve tax records up to seven years past – possibly more depending on their retention policies. If you haven’t gone the accountant or TurboTax route, you’re still not out of options. There’s always the Internal Revenue Service to assist you with any claim going back seven years, albeit at the cost of $50 per filing requested.
Most importantly though, you’ll need a Bankruptcy Lawyer to help you with the intricacies of filing your Bankruptcy. Your case will be unique – every filing is – and each individual filer is guaranteed to find more than enough confusion along the way. So, don’t go it alone, trust the professionals. To learn more about your Bankruptcy options, reach out to Cibik & Cataldo, P.C. at (215)-735-1060, or visit our site to get a free consultation online!
We can guide you through a successful filing and put you back on the path to financial security. For 45 years, The Philadelphia, Pennsylvania debt-relief law firm of Cibik & Cataldo, P.C., has provided superior, cost-efficient, and value-oriented legal services with compassion and respect to thousands of clients in Philadelphia County and the surrounding areas of Montgomery County, Delaware County, Bucks County and Chester County.
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