Bankruptcy processes are very diverse and each case deserves a detailed explanation. Chapter 13, also called reorganization bankruptcy, offers the possibility of putting together a payment plan sustained over time to pay off debts with creditors. It is one of the most chosen options by those people who are in financial difficulties since it is relatively simple to manage. In addition, it allows the term to settle the debts to be extended over time and adjust the installment to the debtor’s income levels. But, nevertheless, not everyone can opt for this option. Below we will answer how I qualify for Chapter 13 bankruptcy, with the requirements and details.
Chapter 13 bankruptcy is named after the subsection number within the United States Bankruptcy Code. Based on the debtor’s disposable income, a monthly payment plan is drawn up for a period of 3 to 5 consecutive years. With the mediation of the authorities, this plan is drawn up that allows debts to be settled with creditors. After the period ends, any remaining balance will be forgiven. This means that not only will you be allowed to pay off your debts on a staggered, income-based basis, but you’ll also likely receive a significant reduction in your final amounts. Therefore, it is one of the most convenient options for those seeking to reorganize their financial situation.
Requirements to know if I qualify for Chapter 13 bankruptcy
There are some basic requirements to apply for a Chapter 13 bankruptcy. For example, a fundamental one corresponds to the level of income. If these are higher than those stipulated as a limit in Chapter 7, it is most likely that you will have to adapt to a regime in Chapter 13. In addition, it is necessary that you have debts guaranteed by an asset. These types of debts are those that are contracted with the asset in question as collateral, such as a car. In case of not being able to afford the payment of the debt, it is likely that the collateral will be liquidated to pay it off. However, when filing for a Chapter 13 bankruptcy, this is not necessarily the case.
In addition to the above, there are other issues to meet to ensure that you qualify for Chapter 13 bankruptcy. One of them is the recent history: it is not possible to request this resource if a bankruptcy process has already been initiated during the 180 days prior to the date. There is also a requirement to attend an accounting consultancy. This is intended to inform the debtor about the consequences and responsibilities involved in the bankruptcy process, in addition to improving their financial outlook by giving them a more complete vision to avoid similar situations in the future. An important point to keep in mind is that the records must show that the person has sent their tax returns for the 4 years prior to the process. This guarantees that the person is up to date with their tax obligations, and enables them to file for Chapter 13 bankruptcy.
There are also set limits for both secured and unsecured debt if I qualify for Chapter 13 bankruptcy. These amounts are updated over time, so it is convenient to review the information on the date you plan to start the bankruptcy process. As a reference, for the year 2020 the limit for unsecured debt was $419,275, while that of guaranteed debt reached $1,257,850. It should be noted that some debts, such as alimony, student loans or fines for criminal cases, are not included in the registry and therefore cannot be forgiven. As for the housing mortgage debt, this is suspended for the duration of the process but remains in force. That is, at the end of the bankruptcy period, the debt still exists and it is necessary to catch up with the payments.
Professional help if I qualify for Chapter 13 bankruptcy
When you file for Chapter 13 bankruptcy, you will automatically be assigned a trustee who will advise you through the process. However, this person is still a judicial official. Therefore, he does not work to defend his interests but those of the court. That is why it is important that you have a legal advisor who is on your side and allows you to make the most convenient decisions with your future in mind. Michael Brooks has the experience and solidity to defend your case in the best way and take it towards a substantial improvement in the financial situation.
The bankruptcy filing process can be very cumbersome and take longer than you think, even if I qualify for Chapter 13 bankruptcy. You will have to present a series of documents, including the payment plan, and answer questions under oath in front of the creditors. The judge will evaluate the situation and decide whether or not to approve the payment plan. Therefore, the filing process is subject to rejections by the judge and creditor strategies. In other words, it is not enough to file for bankruptcy, it must be approved. For this very reason, you need a qualified bankruptcy attorney in Miami like Michael Brooks. Years of experience in similar cases endorse him as one of the experts on the subject, which will allow him to get his financial situation afloat.
