There are a few different types of bankruptcy and the right one for you depends largely on what you qualify for. Here are the requirements you’ll need to meet to be able to file a Chapter 13 bankruptcy and start the process of paying down your debt.
You Aren’t a Business Owner
Businesses aren’t able to file for a Chapter 13 bankruptcy since it’s limited only to individuals. However, they can file for Chapter 11, which is specifically designed for a business with debt.
Your Income Is Steady
The two primary types of bankruptcy for individuals are Chapter 13 and Chapter 7. Chapter 7 bankruptcy allows you to eliminate most or all of what you owe, while a Chapter 13 allows you to repay your debt over time. Your payments will be made to a bankruptcy trustee, who then distributes it between your creditors based on priority. If you have debt left over after your repayment period is complete, it’s typically discharged.
You’ll need a regular income to be able to make the monthly payments for a Chapter 13 bankruptcy. If you can’t, your financial situation may be better suited to a Chapter 7 bankruptcy.
You Don’t Owe Too Much Debt
To qualify for a Chapter 13 bankruptcy, you may not have more debt than you are able to pay. The limit of secured debt you may owe to qualify is $1,010,650.00. You may also owe up to $336,900.00 in unsecured debt, or a total of up to $1,347,550.00. If you owe more than these amounts, you will not be able to file.
You Have Access to Disposable Funds
If you earn more than you spend every month, the funds you have remaining are considered “disposable income.” You must have some disposable funds to qualify for a Chapter 13 bankruptcy. If your monthly bills and other financial responsibilities exceed the amount of money you make in a month, you don’t have any disposable income. This would prevent you from being able to make your monthly payments under a Chapter 13.
Find Out If a Chapter 13 Bankruptcy Can Help You
For many people, filing a Chapter 13 bankruptcy is an effective way to put an immediate stop to collections and start getting back on track financially. Are you interested in learning if a Chapter 13 bankruptcy is your best option at a clean financial slate? We can help. Contact Sims Bankruptcy now at 469-751-7467.