Eligibility for Chapter 13

If like most people seeking debt relief, your money has run out and expenses and bills keep piling up, you may have no choice but to file for bankruptcy.  If you are behind on your mortgage or car loan payments, you will have to file under Chapter 13.  But not everyone can file for Chapter 13 bankruptcy.  There are strict eligibility requirements in order to qualify.

Who is Eligible For Chapter 13 Bankruptcy in San Diego?

When entering the complicated legal world that bankruptcy inhabits, navigation can be very confusing.  In order to qualify for bankruptcy under Chapter 13, your secured and unsecured debt must be below the limits set forth in the Bankruptcy Code.  This is because the Code, in describing who may be a Chapter 13 debtor (a person who files bankruptcy), specifies limits on the amount of debt that you can have in order to be eligible to file. Consulting a San Diego Bankruptcy Lawyer about your filing options is the right first step.

For Individuals and Business Owners

Chapter 13  is intended for individuals, and can be utilized by business owners as well under limited circumstances.  As an individual, the decision to file under Chapter 7 or 13 will be made by your lawyer, after a detailed examination of your assets, debts, income, expenses and other circumstances aw well as your specific needs.

Disposable Income

Perhaps the most important factor that your attorney will consider is your debt to income ratio and resulting disposable income. This is because in a Chapter 13 case, you must show the Court that you have sufficient regular income to be able to repay the missed payments on your home loans and car loans as well as any back taxes.  At the same time, you don’t want to make too much money because then the trustee overseeing your case will require that you use your excess disposable income to repay part or all of your unsecured debt (credit cards, medical bills, and other miscellaneous bills.)

Other Eligibility Requirements

Of course, you must meet all of the other eligibility requirements.  You must be under the debt limits.   These limits are spelled out on the Chapter 13 page.  All state and federal tax returns must have been filed.  You must complete credit counseling with a San Diego County course provider.   You must not have filed for bankruptcy relief too recently.  Otherwise, you will be ineligible for a discharge and the automatic stay (that stops foreclosure of your home) may not apply to protect you, or may apply for only 30 days.

Talk to an Attorney

If Chapter 13 is the appropriate type of debt relief option for you, consult with an attorney to see if you qualify. An experienced attorney can tell you what steps to take to start your journey into bankruptcy and then get out of debt San Diego.