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What requirements must be met to file for Chapter 13 bankruptcy?

For some individuals in Tennessee, filing for bankruptcy is the best way to overcome their financial challenges and wipe the slate clean. One type of bankruptcy someone in this situation may consider filing for is Chapter 13 bankruptcy. A Chapter 13 bankruptcy does not liquidate the debtor's assets, but instead lets them keep their assets and pay their creditors back over the next three or five years via a plan that is approved by the court. However, to qualify for Chapter 13 bankruptcy, a debtor must meet several requirements.

First of all, the debtor cannot be a business entity. Chapter 13 bankruptcy is only available to individuals, whether they are filing as a single individual or jointly as spouses. In addition, the debtor must not have filed for Chapter 13 within the prior two years. Moreover, a prior bankruptcy petition must not have been dismissed by the court within the past 180 days in certain circumstances.

In addition, to file for Chapter 13 bankruptcy, the debtor must undergo credit counseling at least 180 days beforehand. Also, there are debt limits to filing for Chapter 13 bankruptcy. As of right now, Chapter 13 bankruptcy is only an option for those who have under $336,900 in unsecured debt and under $1,010,650 in secured debt. Individuals must also have filed their federal income taxes for the past four years.

Also, certain debts in a Chapter 13 bankruptcy must be repaid in full. If the debtor cannot do so, he or she may not qualify for Chapter 13 bankruptcy. Moreover, a debtor needs to be able to pay his or her unsecured creditors at least as much as what their nonexempt property is worth over the course of the repayment plan. Also, it may go without saying that a debtor who wishes to file for Chapter 13 bankruptcy must make enough money to pay for his or her living expenses along with the repayment plan expenses.

Filing for Chapter 13 bankruptcy may make financial sense for some, but as you can see, it can be complicated, and this post cannot serve as the basis for any bankruptcy filing. Therefore, those who want to learn more about whether they qualify for Chapter 13 bankruptcy should seek help from an experienced bankruptcy attorney.

Source: FindLaw, "Who Can File for Chapter 13 Bankruptcy?," accessed Sept. 4, 2016

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

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