Some people in Tyler, Texas find that they are suffering under unmanageable debt, and they need help dealing with this debt in a way that provides them with a brighter financial future. Therefore, they may be interested in filing for Chapter 13 bankruptcy. However, as discussed a previous post on this blog, certain requirements must be established before a person can file for Chapter 13.
For example, there are limits on how much debt a person can have if that person wishes to file for Chapter 13. Chapter 13 is only an option for those who have under $336,900 in unsecured debt. Unsecured debt, such as medical debt and credit card debt, is debt that is not attached to any collateral. Also, a person filing for Chapter 13 must have under $1,010,650 in secured debt, like a car loan or mortgage, which is attached to collateral. Also, a person filing for Chapter 13 must be able to show that he or she filed income tax returns in the past four years, at both the state and federal level.
In addition, per law a Chapter 13 bankruptcy filing mandates that some of a person’s debts must be paid back in full. This includes priority debts, such as child support and taxes, and secured debts like a home loan or car loan that must be kept current while the person is going through the Chapter 13 repayment plan. It also includes other types of secured debts, such as a tax lien.
If a person wants to file for Chapter 13, they should understand that they may have to make payments to unsecured creditors as well, at a minimum in the amount the nonexempt property is valued at during the course of the Chapter 13 repayment plan. To qualify for Chapter 13, a person must also make enough money, minus certain expenses, to meet his or her debt obligations. In addition to paying back priority debts, secured debts and certain unsecured debts, the trustee must also be paid.
In the end, determining whether one qualifies for Chapter 13 can be complicated. While it may be the preferred option for some, a person should first seek the advice needed to determine whether they can pursue this course of action.
Source: FindLaw, “Who Can File for Chapter 13 Bankruptcy?,” Accessed Sept. 18, 2017