Chapter 13 bankruptcy is a great option for debt relief, but even if it seems like something you would be interested in, you need to make sure you're eligible first. Here are a few eligibility requirements to keep in mind:
- You have to make enough money. Unlike Chapter 7 bankruptcy, Chapter 13 does not discharge your debt—it simply creates a manageable payment plan that you will pay in to over the course of three to five years. That means you must have a consistent, reliable source of income in order to pay off your debts. It also means you must have a certain amount of "disposable" income—that is the money you have left over after paying for things like food and shelter.
- Your debts cannot be over a certain amount. There is a cap on the amount of secured and unsecured debt you can have in order to be eligible for Chapter 13. You can have up to $360,475 in unsecured debts (credit cards, student loans, etc.) and $1,081,400 in secured debts (property you own, like a home or car). The dollar limits increase every year based upon the Consumer Price Index.
- You must be current on your income tax filings. When you file for Chapter 13 bankruptcy, you have to provide proof that you filed state and federal income taxes for the last four years. If you haven't, you are required to file your delinquent tax returns immediately (soon). If you owe, the taxes can be paid through your chapter 13 plan, often without interest and with the penalties discharged.
Each bankruptcy case is different, so be sure to contact experienced Houston bankruptcy attorney J. Thomas Black to evaluate your Chapter 13 eligibility. Mr. Black has been involved in bankruptcy law for over 30 years and will be happy to provide you with a free consultation. Call him today at 888-707-1233.