Can I file Chapter 13

Those interested in filing Chapter 13 bankruptcy must meet a few requirements. While there is no qualifying means test (as there is for Chapter 7 bankruptcy), potential Chapter 13 filers must still satisfy a few criteria. Here’s some information you need to know about filing Chapter 13.

 

Past Bankruptcy Filings

Some people need to file for bankruptcy more than once. However, because of the debt elimination bankruptcy offers, the court system requires filers to wait a certain period of time between multiple filings. Specifically:

  • A past Chapter 7 filing: There is no waiting period between a Chapter 7 discharge and a new Chapter 13 bankruptcy case. But there is one caveat to this rule: those who file Chapter 13 within four years of a Chapter 7 discharge are not eligible for a Chapter 13 discharge. For these people, then, Chapter 13 can work solely as a debt reorganization plan without excusing any debts.
  • A past Chapter 13 filing: The waiting period between two Chapter 13 cases is two years. This waiting period is measured from filing date to filing date and most Chapter 13 repayment plans last for at least three years. It’s therefore very unlikely that a filer would file two Chapter 13 cases so close together.

In other words, most people are eligible for Chapter 13 bankruptcy.

 

Can I File Chapter 13 Based on My Income?

This is an important question to ask. In order to get a Chapter 13 discharge, filers must adhere to the repayment plan for its duration (which can be up to five years). Missing payments in the plan puts a filer at risk for having his or her bankruptcy case dismissed from court.

Generally speaking, here are some considerations about Chapter 13 bankruptcy and income.

  • The means test: This test is for those interested in Chapter 7 bankruptcy, but anyone can run the numbers. Those who don’t “pass” the means test are not legally allowed to file for Chapter 7 bankruptcy. According to the U.S. Court system, then, these people have sufficient income to file for Chapter 13.
  • The repayment plan: If the bankruptcy court thinks a filer’s repayment plan is unrealistic based on stated income and expenses, it can (and will) reject the plan. Then it’s up to the filer and his or her attorney to develop a repayment plan that’s more realistic. In fact, working with a bankruptcy attorney from the beginning is one way to help make sure your repayment calculations are realistic and manageable.

 

Can I File Chapter 13 Based on My Debt?

While there are no hard and fast rules about income for Chapter 13 bankruptcy, there are debt limits. In order to be eligible for Chapter 13 protection, filers’ debt must fall within these limits:

  • Unsecured debt limit: Debt not attached to property (including credit card debt and medical bills) cannot exceed $360,475 for Chapter 13 bankruptcy filers. This limit is determined by federal bankruptcy law and changes every few years. If you’d like more information about this debt limit, ask your bankruptcy lawyer.
  • Secured debt limit: Debt linked to property (including house mortgages and car loans) cannot exceed $1,081,400. That means filers cannot owe more than this amount on all secured property combined.

If you’re worried that your debt might exceed these limits, consider consulting with a bankruptcy lawyer about your options.

 

Can I File Chapter 13 to Save My House?

This question is common to many potential Chapter 13 filers, but its answer depends on an individual’s circumstances. Thanks to the legal protection known as the automatic stay, filing for Chapter 13 bankruptcy can delay (and in some cases prevent) foreclosure.

Here’s a look at the relationship between Chapter 13 bankruptcy and mortgage foreclosure:

  • The automatic stay: This becomes active when filers submit their paperwork with the court and can remain in effect for the duration of the case (usually three to five years), though this will depend on the circumstances of the case. It prevents most collection actions, including foreclosure, for a certain period of time.
  • Mortgage modifications: Unfortunately, the bankruptcy court does not have the authority to modify the terms of a primary mortgage. This means that filers cannot leave bankruptcy with a more affordable mortgage plan. But there is still hope for those worried about foreclosure.
  • Debt reorganization and discharge: Chapter 13 allows filers to reorganize non-mortgage debts and discharge some debts partially (as with a cram-down) or in full. The redistribution of income permits some filers to catch up on their mortgage payments.

 

Ask a Bankruptcy Lawyer Whether You Can File Chapter 13 Bankruptcy

If you’re ready to find out whether Chapter 13 bankruptcy could offer debt relief to you and your family, it’s time to connect with a bankruptcy lawyer to get an idea of how Chapter 13 might work for you.

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