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When is an individual eligible for Chapter 13 bankruptcy?

Most people in Tennessee don't rush into bankruptcy lightly. They give it a lot of serious thought and consideration before deciding it is the right choice for them. One worry they may have is whether they will lose all their property in the process. While a Chapter 7 bankruptcy does liquidate an individual's assets, with some exemptions, a Chapter 13 bankruptcy allows an individual to keep his or her assets by entering into a repayment plan to address his or her debts. However, certain factors must be satisfied in order for an individual to be eligible for Chapter 13 bankruptcy.

Per U.S. bankruptcy laws, an individual may be able to file for Chapter 13 bankruptcy if his or her secured debts are under $1,149,525, and his or her unsecured debts are less than $383,175. These numbers are adjusted periodically in order to correspond with the consumer price index. Two examples of a secured debt are a car loan or a mortgage. An example of an unsecured debt is credit card debt.

An individual is not allowed to seek Chapter 13 bankruptcy if, within the last 180 days, that individual had filed for bankruptcy and had his or her case dismissed because he or she purposely failed to go to court when necessary, because he or she did not follow court orders, or because his or her case was dismissed voluntarily after his or her creditors sought relief to take back property on which they had liens.

Finally, within 180 days prior to filing for Chapter 13 bankruptcy, an individual must attend a credit counseling session from a court-approved agency. If, during the counseling session, a plan to manage the individual's debts is developed, that plan needs to be filed with the court.

In the end, individuals interested in filing for Chapter 13 bankruptcy should think about consulting with an attorney, as this post is not a substitute for legal advice. An attorney can assess an individual's financial situation to help him or her determine which chapter of bankruptcy is the right fit for them.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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