Are You Eligible for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a good debt-relief option. It has provisions that allow an individual with regular income to repay debts while keeping all assets. However, not everyone is eligible to file for this chapter. This type of bankruptcy has its own set of rules and eligibility requirements. A skilled bankruptcy attorney in Michigan can help you learn more about Chapter 13 bankruptcy, including who can and cannot file this bankruptcy chapter.
Sufficient Income to Pay Debts
In this chapter, you must have enough disposable income (income after the deduction of allowable expenses) to pay for priority, secured, and unsecured debts. To fund Chapter 13, you can use the income from regular wages, income from self-employment, wages from seasonal work, commissions from sales, or pension payments.
Not Allowed for Business Entity
Businesses are not allowed to file for Chapter 13 bankruptcy. Although a sole proprietor cannot file in the name of the business entity, you may still file for Chapter 13 bankruptcy as an individual even if you own a business. You must declare business-incurred debts for which you are personally liable in your Chapter 13 bankruptcy case. If you’re a sole proprietor—both the individual and business debt liability will be handled by the bankruptcy.
No Record of Dismissed Bankruptcy Case
To qualify for Chapter 13, you must not have filed any bankruptcy petition in the last 180 days that was dismissed for certain reasons such as failing to comply with court orders. In addition, you must not have filed for Chapter 13 bankruptcy in the past two years or Chapter 7 bankruptcy in the past four years.
Income Tax Filings Must Be Current
Before you file for Chapter 13 bankruptcy, you need to submit proof that you filed your tax returns for the past four years. Failure to do so may lead to the dismissal of your bankruptcy case. In case you need more time to get current on your income tax filings, the court may postpone the proceedings.
Debts Must Not Exceed the Limits
Certain debt limits may prevent you from filing for Chapter 13 bankruptcy. You won’t qualify for Chapter 13 bankruptcy if your secured and unsecured debts exceed the maximum amount. The debt limit figures may change every three years.
Completed the Credit Counseling Requirement
Before you file any bankruptcy chapter, you must finish the counseling courses from an approved credit counseling agency at least 180 days before the bankruptcy filing. You need to submit a certificate of proof to the bankruptcy court.
Proposed Plan Repays All Required Debts
Under Chapter 13, bankruptcy law requires the repayment of some debts in full. Debts in this category include priority and secured debts. Child support, alimony, and non-dischargeable taxes are considered priority debts. In addition, secured debts that survive the repayment plan such as mortgages or auto loans must remain current. Judicial and tax liens must also be paid in full during the repayment time.
How to File for Chapter 13 Bankruptcy
When you intend to file for Chapter 13 bankruptcy, there are several guidelines that you need to follow. This is why it pays to seek experienced professional help from a knowledgeable bankruptcy attorney in Royal Oak to help you go through the steps of the Chapter 13 bankruptcy process.
You may begin your bankruptcy filing by accomplishing the free and official online bankruptcy forms from the website of the United States Bankruptcy Court. You need to fill out the form with the complete details of your present financial status. You need to declare all your assets, liabilities, monthly income, living expenses, bank account information, credit card debt, loan debt, and property transactions. You need to ensure that all the details written on your paperwork are accurate before you file your case to the local court and pay the filing fees.
The case will start once you have filed your forms, paid the filing fee, and submitted proof that you completed a credit counseling class. Once you file for bankruptcy, you enter an “automatic stay”. It prevents any acts of litigation, collection, garnishment, repossession, or foreclosure by creditors and collection agencies.
Keep in mind that you have fourteen days to submit your Chapter 13 repayment plan unless you receive an extension from the court. Afterward, the bankruptcy court will hold a “confirmation hearing”. The plan must be devised strategically to aim for the least possible payments while keeping your property.
In addition, it is also important to attend the creditor’s meeting. Depending upon the bankruptcy type, the creditor’s meeting usually takes place between 21 up to 50 days after the filing of the bankruptcy petition. At the meeting, the bankruptcy trustee checks the bankruptcy paperwork and creditors can also raise their questions regarding your financial status.
Finally, you must keep up with your Chapter 13 plan payments. The first payment is due within 30 days after you file your bankruptcy petition. If you fall behind on your payments and are unable to catch up, your case will be dismissed and you will not receive a bankruptcy discharge.
Hire an Experienced Royal Oak Bankruptcy Attorney Now!
Filing bankruptcy Chapter 13 can be your last resort to help you pay off your debts, restructure your finances, save your property, and achieve financial freedom. If you are considering filing for Chapter 13 bankruptcy in Michigan, do not hesitate to consult our experienced Royal Oak bankruptcy lawyers at Hammerschmidt Stickradt & Associates. Our bankruptcy law firm will help you understand the basics of Chapter 13 bankruptcy, how it works, and what it can do for you.
We will help you assess your financial situation, develop a repayment plan, protect the assets you want to keep, and ensure the success of your bankruptcy case. We will work with you to figure out an ideal payment plan that you would be able to afford and ensure that your best interests will be pursued.
Call us now at (248) 609-6103 and schedule a free initial consultation.