Are you struggling to keep up with your debt payments and looking for a way out? Then, filing for bankruptcy may be an option for you. Specifically, Chapter 13 bankruptcy can be a valuable option for individuals who want to reorganize their debts and create a plan to repay them over time.
However, you should know that not everyone is eligible for Chapter 13 bankruptcy. So, what makes you qualify for Chapter 13 bankruptcy? This article explores the requirements and qualifications for Chapter 13 bankruptcy.
Income requirements
Chapter 13 bankruptcy is also known as a wage earner’s plan because it is designed for individuals with a steady income. Therefore, to qualify, you must have a reliable source of revenue. In addition, your income must be sufficient to cover your living expenses and debt repayment plan.
You must have received income from a regular job, business or other source for at least six months before filing for bankruptcy. This income can include wages, salaries, commissions, bonuses or any other type of income.
Debt limits
Another requirement for Chapter 13 bankruptcy is that your debts must be within certain limits. You’ll only be eligible for this debt relief if your combined total secured and unsecured debts are less than $2,750,000.
Secured debt includes mortgages and car loans, while unsecured debt includes credit card debt, medical bills and personal loans. If your debts exceed these limits, you may need to consider other options, such as Chapter 7 bankruptcy or debt settlement.
Credit counseling
Before filing for Chapter 13 bankruptcy, you must complete a credit counseling course from an approved provider. This course will help you understand your financial situation and provide information on bankruptcy alternatives. Once you complete the credit counseling course, you’ll receive a certificate you must file with the bankruptcy court and your bankruptcy petition.
Good faith effort
To be eligible for Chapter 13 bankruptcy, you must also demonstrate a good faith effort to repay your debts. This means that you must be willing to make payments under the Chapter 13 plan and take steps to reduce your debts and expenses. If the court determines you are not making a good faith effort to repay your debts, your bankruptcy case may be dismissed.
Qualifying for Chapter 13 bankruptcy requires meeting certain requirements and a good faith effort. Therefore, you should ensure you meet all the eligibility requirements before beginning the bankruptcy process.