Chapter 13 bankruptcy allows individuals to develop a plan to repay all or part of their debts. Unlike Chapter 7, which involves liquidating assets, Chapter 13 allows debtors to keep their property and make payments over time.
Not everyone qualifies for this type of bankruptcy, and certain criteria must be met. The eligibility requirements to file Chapter 13 bankruptcy are found here.
Individual or joint filers only
Chapter 13 bankruptcy is only available to individual consumers. Corporations cannot file under this chapter.
- Individual filers: Regardless of employment status, any individual can file if they meet the other criteria.
- Joint filers: Married couples can file jointly for Chapter 13, and both spouses’ financial situations will be considered.
Secured and unsecured debt limits
There are specific debt limits for those filing for Chapter 13 bankruptcy. The current limit is $2,750,000 in secured and unsecured debts. These amounts are subject to periodic adjustments for inflation.
Regular income requirement
Chapter 13 requires that the debtor has a regular source of income to ensure that they can meet the obligations under the repayment plan. Income can come from different sources, including:
- Social security
Note that this is not a comprehensive list. It is also necessary for the income to be sufficient to cover living expenses and the repayment amount.
Prior bankruptcy filings
A debtor’s prior bankruptcy history may also affect eligibility. If the individual has a past Chapter 13 filing dismissed, the new filing may be affected by time restrictions. The waiting period is usually four years for those who had a prior Chapter 7 filing that was discharged.
Filing for Chapter 13 bankruptcy requires careful consideration of various eligibility criteria. The process is complex, and knowing the requirements is necessary.