The two most common branches of bankruptcy are Chapter 7 and Chapter 13, and Chapter 13 is often used when a person is not eligible for Chapter 7 or when a Chapter 7 case would not provide the relief the person needs. If you are considering Chapter 13 and are not sure if you should pursue this branch, here are some questions to evaluate that will help you know if you qualify for this branch of bankruptcy.
Do you have a regular income?
To use Chapter 13 as a way of finding debt-relief, you will have to prove that you have regular income from your job. You can easily prove this if you have paystubs from work, but it is harder to prove if you are self-employed. If you are self-employed, your lawyer would help you find ways to prove that you have a steady income if you really do. You must have a regular income for this branch of bankruptcy because it requires a repayment plan. Without a regular income, it would be hard for you to agree to a repayment plan and follow through with it.
Are you current on your tax return filings?
You cannot qualify for Chapter 13 if you are not current on your tax returns, so it is important to make sure you are current on them if you plan to file. You will likely have to submit two years of tax returns when filing for Chapter 13, and these must be the last two years. If you have not filed, you should file them now, and then you could file for bankruptcy after doing that.
Have you filed for bankruptcy in the past?
Another issue to be aware of is past filings. If you have ever used bankruptcy in the past, whether it was Chapter 13 or Chapter 7, there will likely be a waiting period before you can file again. It is also important to know that if you filed in the past and had your case dismissed by the trustee, there is also a waiting period before you can file again.
How much is your debt?
The other thing to know is that you cannot file if you have too much debt. The limits are that you must have less than $1,184,200 in secured debts and $394,725 in unsecured debts in order to qualify for Chapter 13.
If you believe that you would qualify for Chapter 13 or would like more information about Chapter 7, you should schedule an appointment with resources like David M. Todaro Co., LPA to find out if this would be a good strategy for you to use for debt-relief purposes.