Eligibility Requirements for Chapter 13

Bankruptcy has proven to be an option for many people experiencing extreme financial hardship. As a result, many debtors who find themselves unable to pay their debts look to bankruptcy as the first line of defense. However, the court requires that debtors meet certain conditions before being able to file for bankruptcy – not just anyone can simply file for bankruptcy. If you want to file for Chapter 13 bankruptcy, you will need to meet the Chapter 13 eligibility requirements as set out by the courts.

Eligibility Requirements for Chapter 13

In a Chapter 13 bankruptcy, you will be required to use your income to repay some or all of your debt over the course of a repayment plan determined by the court. Consequently, to be eligible you must prove that you can afford to make regular payments toward your debts in the future. You will need to show that you have a regular income and that it is high enough that you can make substantial payments consistently.

Eligibility is also based on your total debt at the time you file for bankruptcy. Your secured debts (debt secured by collateral, like a mortgages or vehicle loans) and unsecured debts will be assessed separately to determine your eligibility. Having too much debt can make the court unwilling to consider you for a Chapter 13 bankruptcy. In addition to meeting the debt limits, you will also need to receive and complete a court recognized credit counseling course before filing for bankruptcy.

How Can I Make Sure I’m Eligible for Chapter 13?

If you have questions about your Chapter 13 eligibility, it will be important for you to speak to a bankruptcy lawyer about your eligibility. Your lawyer can look at the circumstances surrounding your case and assess your eligibility based on the laws in your state. If it turns out you are eligible, your bankruptcy lawyer will also be able to advise and represent you in your filing, if necessary.

What If I’m Not Eligible?

Unfortunately, not everyone is eligible for Chapter 13 bankruptcy. But even if you find yourself unable to file for Chapter 13, you may have viable options for financial recovery though you cannot pay your debts. Alternatives to Chapter 13 bankruptcy include negotiation with creditors, debt counseling programs, and self-designing a repayment plan (unassisted by the court). Also, if you have not yet considered Chapter 7 bankruptcy, you may want to seek counsel from a lawyer about whether that option may fit your needs. Chapter 7 is a form of bankruptcy where the court repossesses property from a debtor in exchange for discharging certain parts of their debt. In any case, consultation with a bankruptcy attorney will provide you with all the options that are available to you.