For people who do not meet the stricter income qualifications of a Chapter 7 liquidation bankruptcy, Chapter 13 bankruptcy can be a viable alternative for those facing financial crisis.  Chapter 13 is typically the best approach for homeowners to reorganize their debts without losing their homes, cars, and other valuable assets. Additionally, a Chapter 13 Bankruptcy action not only can prevent creditors from initiating foreclosure and wage garnishment proceedings, it can also help individuals reduce or even eliminate their outstanding credit card debt.

To qualify for Chapter 13 Bankruptcy, a debtor must be employed or at least have an income sufficient to afford the post-Chapter 13 debt reorganization payments as well as their current living expenses.  Keep in mind that a person’s debt cannot exceed the statutory ceiling set by the federal Bankruptcy Code in order to qualify under Chapter 13.  Once a person is deemed eligible for Chapter 13 Bankruptcy, the Bankruptcy Court will implement a debt repayment plan, which usually lasts between 3 to 5 years.

It is important to keep in mind that before filing for Chapter 13 Bankruptcy, you must follow all applicable time deadlines in order to qualify.  For instance, if you happen to face a dismissal of your bankruptcy action, you cannot file again for another 180 days.  Within this time period, you must receive mandatory credit counseling by a pre-approved agency.  Moreover, there are also jurisdictional requirements that must be met when filing for Bankruptcy.  Specifically, you must be a resident of a state for 90 days before filing for bankruptcy.

When filing for Chapter 13 Bankruptcy, there is a significant amount of paperwork required for a debtor to submit along with their Bankruptcy petition.  For example, a debtor typically must file the following:

  • Schedules of liabilities and assets
  • A schedule of income and expenses
  • A statement of finances
  • A certificate of credit counseling attendance
  • A  list of all of a debtor’s creditors
  • A list of the amount of debt owed to each creditor
  • A list of the debtor’s monthly living expenses

Once a petition for Bankruptcy along with all of the associated documentation is filed, the Bankruptcy Court will issue an automatic stay.  This prevents creditors from pursuing any debt collection actions against a debtor while the stay is in place.  Moreover, all of a debtor’s creditors identified in his or her court filings will receive notice of the bankruptcy action.  The bankruptcy court will also assign a trustee to a debtor’s case.  A trustee’s role in a Chapter 13 Bankruptcy action is to review all of the documents that the debtor submitted to the court and to conduct an investigation of his or her case.  Within 15 days of filing, a Notice of Commencement of Case will be sent to the debtor as well as his or her creditors.  This provides information as to the deadlines for creditors to file claims against a debtor and the times and locations of meetings.

Contact Me Now for a Free Consultation

If you or a loved one is considering filing for Chapter 13 Bankruptcy, contact my office today for a free consultation.  I will give you the time you deserve to evaluate your financial situation and offer practical solutions to resolve your debt.