The fact that Chapter 13 bankruptcy allows you to keep property and assets while resolving issues with creditors makes it an attractive option for people in Indiana suffering under the weight of debt. Still, not everyone will qualify for this form of bankruptcy. Whether you are eligible for Chapter 13 depends on a number of factors that need to be met.
FindLaw explains that Chapter 13 is meant for individuals, not businesses, although married couples are allowed to file together for Chapter 13 protection. Personal business debts may be an exception if you were to file as a sole proprietor or as a business partner. People are allowed to file for those debts if they are personally liable for them. However, business entities such as corporations and LLCs must file for Chapter 11 protection instead.
To successfully file for Chapter 13, you need to possess sufficient income, after specific expenses are deducted, to make payments to unsecured and priority creditors, as well as a commission to the bankruptcy trustee. You can expect your income to be measured by wages or self-employment income, as well as unemployment or Social Security benefits, and also income from a spouse.
Debt level can be another barrier to Chapter 13 bankruptcy. Secured debt in excess of $1,010,650 and unsecured debt that rises above $336,900 can disqualify you from Chapter 13. Since these debt limits are subject to inflation adjustment every three years, it is possible for these amounts to be adjusted. If your debt levels meet the bankruptcy standard, you have to supply a repayment plan that pays priority debts and some secured debts in full, following the requirements of bankruptcy law.
Failure to fulfill credit counseling requirements can also deny you Chapter 13 protection. People who wish to file for bankruptcy need to receive counseling from a credit counseling agency. You should receive a certificate that shows you have completed your counseling session. This certificate should be filed at the time you file bankruptcy or fifteen days following it.
Various legal hurdles can delay a bankruptcy proceeding or derail it altogether. Chapter 13 can be denied if the filer had discharged debts under Chapter 13 in the prior two years or under Chapter 7 in the last four. Also, a bankruptcy filer may be denied if the filer had a previous bankruptcy case dismissed in the last 180 days due to disregarding court orders.
Potential Chapter 13 filers may have other questions about eligibility, which an experienced bankruptcy attorney can help answer. Keep in mind that this information is presented as education and not as actionable legal counsel.
