Chapter 13 Bankruptcy Eligibility Requirements (Part II)

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.

You Must Have Disposable Income
For you to qualify for Chapter 13 bankruptcy, you must have enough income in excess of your expenses, called your “disposable income”, to fund a repayment plan that meets Chapter 13 requirements. These requirements include full payment of your priority debts as well as payment of a percentage of your unsecured debts.

Your Proposed Payment Must Equal the Value of Your Non-Exempt Assets
The total amount of your payments proposed to be paid under your plan must be at least equal to what your creditors would have received had you filed for Chapter 7 bankruptcy, that is, the value of your nonexempt property. (“exempt” property is the property you would be allowed to keep if you file a Chapter 7 case.)

All Your Disposable Income Must Be Devoted To The Plan
Bankruptcy law requires that you pay al your disposable income into your Chapter 13 plan for a minimum of 36 months, unless you can pay off all of your debts in less time. On the other hand, if making 36 monthly payments will not be enough to repay the minimum amount required by the court, you will have to do one of the following:
a) Ask the court to approve a plan that lasts more than 36 months. The court can authorize a plan of up to 60 months (5 years)
b) Increase your monthly disposable income, usually be decreasing your expenses, so that more money is distributed to your creditors each month.
c) Before you file, sell property to pay down your debts so that your disposable income will be enough to fund the plan.

Your Plan Must Pay 100% of Certain Debts
High priority debts such as back taxes and child support must be paid in full over the life of your Chapter 13 plan. If you are in arrears on debts secured by collateral, such as a car note or a mortgage, you must also pay the in full under the plan if you want to hold on to the property. Unsecured debts do not need to be paid in full, but some courts are more liberal than others as to what percentage of repayment they require,

Your Proposed Budget Must Be Reasonable
To determine whether your disposable income is high enough to fund a Chapter 13 plan, you must create a reasonable monthly budget. If you are not proposing to repay 100% of your unsecured debts, the court, the trustee, or a creditor may challenge your budget if they think it’s too generous, that is, it includes expenses other than necessities.
On the flip side, if you aren’t realistic about what it costs to live, that is, you’ve understand your expenses so that you product enough income to fund a plan, your creditors or the trustee are likely to object on the ground that your plan isn’t feasible. And even if there is no objection, it may not be in your best interest to file Chapter 13 bankruptcy that is doomed to fail.

Bankruptcy Is it the right solution to your debt problems? Attorney Robin Leonard

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.

Chapter 13 Bankruptcy Eligibility Requirements (Part I)

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.

Businesses Can’t File for Chapter 13 bankruptcy
To file a Chapter 13 bankruptcy case, you must be an individual (or a husband or wife filing jointly). If you own your own small business, you can include all business debts on which you have personal liability. You have to file your case in your name, however, and not in the name of business, because a business cannot file for Chapter 13 bankruptcy. On your bankruptcy papers, you will need to list all fictitious business names or DBAs (“doing business as “) that you’ve used as a sole proprietor.
As with Chapter 7 bankruptcy, if you operate your business as a sole proprietorship or in partnership with your spouse, you, or you and your spouse, are personally liable for the debts of the business. For bankruptcy purposes, you and your business are one and the same. You can include all of the business debts in your Chapter 13 bankruptcy 13 case. You can also include the debts you are personally liable for as a member of a business partnership. There is one exception: stockbrokers and commodity brokers cannot file a Chapter 13 bankruptcy case, even just to include personal (non business) debts.
You cannot file a Chapter 13 bankruptcy on behalf of a corporation, limited liability company (LLC), or partnership. If you want to file a reorganization bankruptcy in that situation, you must file a business Chapter 11 bankruptcy.

You Must Have Stable and Regular Income
You must have stable and regular income to be eligible for Chapter 13 bankruptcy. That doesn’t mean you must earn the same amount every month. But the income must be steady, that is, likely to continue for an indefinite period, and it must be periodic, weekly, monthly, quarterly, semi-annual, seasonal or even annual. You can use the following types of incomes to fund a Chapter 13 plan:
a) regular wages or salary
b) income from self-employment
c) wages from seasonal work
d) commissions from sales or other work
e) pension payments
f) Social Security benefits (although some courts won’t allow it)
g) Disability or workers’ competition benefits
h) Unemployment benefits, strike benefits, and the like (if other income will be available when these benefits expire)
i) Public benefits (welfare payments)
j) Child support or alimony you receive
k) Royalties and rents
l) Gifts of money from relatives or friends
m) Proceeds from selling property, especially if selling property is your primary business.

Bankruptcy Is it the right solution to your debt problems? Attorney Robin Leonard

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.