Do I Qualify for Chapter 13 Bankruptcy?

If you’re considering bankruptcy, you may be wondering whether Chapter 13 bankruptcy is right for you. There’s no substitute for the advice of an experienced Kentucky bankruptcy attorney, but this article will discuss some of the requirements you’ll need to satisfy to qualify for Chapter 13 bankruptcy.

To qualify for Chapter 13 bankruptcy, you must meet several criteria:

1. Have a regular source of income that provides enough disposable income to enter into a debt repayment plan
2. Not have debts that exceed Chapter 13 limits
3. Complete pre-bankruptcy credit counseling prior to filing

We’ll discuss each requirement.

You must have a regular source of income to qualify for a Chapter 13 bankruptcy. That’s because Chapter 13 requires you to have a viable plan to pay off your debts or a lower percentage of your debts under the bankruptcy, and it will be impossible to pay off your debts over time if you do not have sufficient income.

To qualify for a Chapter 13 bankruptcy, your debts must not be greater than the Chapter 13 limit. As of 2014, the Chapter 13 limit is $383,175 in unsecured debts and $1,149,525 in secured debts. The debt limits are periodically adjusted to reflect changes in the consumer price index.

There are also restrictions on filing if you have filed for bankruptcy in the past. Generally, you can file for Chapter 13 only if you haven’t had a discharge in a Chapters 7, 11, or 12 in the past 4 years and haven’t had a Chapter 13 discharge in the past two years.

Unlike Chapter 7, which discharges most of a person’s debt without repayment, Chapter 13 plans must provide for repayment of debts over a three to five year period. The repayment period may not be shorter than three years and longer than five years. You will be required to pay all of your disposable income to your creditors for the entire three to five year term. Disposable income is equal to income minus allowed expenses.

If you’re considering Chapter 13 bankruptcy, you should contact a competent Louisville bankruptcy attorney to help you evaluate whether you qualify.