When you are in debt that you can no longer pay, filing for bankruptcy may be your best option. You can choose to either file for Chapter 7 or Chapter 13 bankruptcy. The former liquidates assets, while the latter reorganizes debts.
Therefore, with Chapter 13 bankruptcy, you can keep some of your assets and develop a payment plan for your debts. Nonetheless, not everyone can choose this option. Here are the eligibility requirements for filing for Chapter 13 bankruptcy.
You can file for Chapter 13 bankruptcy if your total debts (secured and unsecured) are less than $2,750,000 as of the filing date. This amount may change due to different factors, primarily inflation. Thus, always confirm the existing amount when you want to file.
No prior petition dismissal
If you had filed for a Chapter 13 bankruptcy petition in the last 180 days and it was dismissed, you may not be eligible to file again. The dismissal may have been due to not appearing in court or complying with its orders. Your creditors may also voluntarily dismiss your petition if the court granted them liens on your property.
You may be allowed to file for Chapter 13 bankruptcy if you have received credit counseling from an approved agency. The counselor may help you develop a plan for paying off your debts by reviewing your assets and liabilities.
You will also be educated on how to manage your finances and avoid debts in the future. You should present the debt management plan to the court, if you developed one. This rule may be exempted during emergencies or if your area has fewer or no approved agencies.
Chapter 13 bankruptcy offers more security and flexibility. You should get adequate information about your issue to create a manageable payment schedule if you are eligible to file for it.