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For certain individuals who find themselves drowning in debt, one good option may be that of Chapter 13 bankruptcy. Though less than the amount actually owed, applied provisions allow someone with regular income to keep their assets while repaying creditors. Assets can include cars, houses, etc. The Chapter 13 bankruptcy requirements, however, for bankruptcy protection may or may not be met by some people.

Also in question is the topic of Chapter 7 vs. Chapter 13 bankruptcy, and which would be right for the person in debt. There are distinct differences between the two.

The following is some information regarding Chapter 13 bankruptcy for those interested in the process.

Chapter 13 Bankruptcy

To receive bankruptcy protection through Chapter 13, you’ll need to repay some of your debts. The good news is, however, not all debts will have to be repaid in full. Using a 3 to 5-year payment plan, which will need to be approved or confirmed by the courts, you will settle your debts for less than you actually owe out right.

Requirements for Chapter 13

Wondering what qualifies you for Chapter 13? Some of the current Chapter 13 bankruptcy requirements will be listed here, but you should speak with a professional if you have any questions regarding the process.

Using official paperwork for bankruptcy, you will provide proof that you:

  • Are within debt amount limitations
  • Are up-to-date on tax filings
  • Are not a business owner but, rather, an individual…
  • And have enough income through employment to cover monthly required payments

Important Financial/Income Factors before Qualifying for Chapter 13

Before you can file for Chapter 13, some things have to be in place. Sufficient disposable income, for example, must be something you have access to. To fund a Chapter 13 plan, some of the following sources can be used as income:

  • Income from self-employment
  • Regular salary or wages
  • Commission from work such as sales
  • Wages from seasonal work
  • Disability or Worker’s Compensation benefits
  • Social Security benefits
  • Pension payments
  • Alimony or child support you receive
  • Welfare payments/public benefits
  • Strike benefits, unemployment benefits, etc.
  • Proceeds from a property sale
  • Rents and royalties

Your source of income can also be your spouse’s if, for example, you’re not working or your income doesn’t meet the requirements.

Why People Choose Chapter 13

In some cases, it’s simply a better choice to go with Chapter 13 than Chapter 7. Here are some examples of why Chapter 13 may be chosen by a debtor:

  • Property that would have to be liquefied for Chapter 7 bankruptcy can be kept by the debtor in a Chapter 13 filing.
  • While still paying a debt, wage garnishments (as an example of a collection action) can be avoided by the debtor.
  • Over 3 to 5 years, the arrearages can be paid if a car owner or homeowner is behind on their payments, and they’ll still get to keep their car or home.
  • A person who isn’t eligible for Chapter 7 because they did not pass the “means test” (their income may have been excessive) may opt to go with Chapter 13.

Now that you have a better idea of who can declare Chapter 13 bankruptcy, here’s whom to talk to.

Is It Time to File Chapter 13 Bankruptcy? Confer with The Debt Defenders by Ciment Law Firm, PLLC

Talk to a professional from The Debt Defenders by Ciment Law Firm, PLLC about the difference between Chapter 7 and Chapter 13 to find out which suits your circumstances better. We will give you the information and assistance you need to clear your debts.

Contact us today. Tell us about your debt. Call 866-493-1308 for an appointment. You can also fill out our convenient online form to begin communication.