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Is Chapter 13 bankruptcy right for you?

Struggling with overwhelming debt is tough. Trying to figure out if bankruptcy can help you only adds to the stress.

In general, if you own property and want to keep it, Chapter 13 bankruptcy is most likely the right option for you. Chapter 13 is a debt reorganization that allows you to restructure your debt into a 3- to 5-year repayment plan that is approved by the court. 

To qualify for Chapter 13 bankruptcy, requirements include the following:

  • Be an individual or married couple - Only individual consumers can file for Chapter 13. Business entities typically will file for Chapter 11 bankruptcy instead.
  • Do not have a recently discharged bankruptcy - If you have had a Chapter 13 bankruptcy within the past 2 years or a Chapter 7 bankruptcy within the past four years you are ineligible for Chapter 13.
  • Do not have a recent bankruptcy dismissal - You are unable to file for Chapter 13 bankruptcy if you have had a previous bankruptcy dismissed within the past 180 days because you willfully violated a court order, failed to appear in court or requested a dismissal after a creditor asked the court to lift the automatic stay.
  • Do not have debts that are too high - You must have less than $336,900 in unsecured debt, such as credit cards and medical bills, and less than $1,010,650 in secured debt from property.
  • Have filed your income tax returns - You must provide proof of filing state and federal income taxes for the past four years.
  • Have enough income to make arranged debt repayments - After deducting allowable living expenses, you must have enough income to satisfy debt obligations.
  • Attend credit counseling - At least 180 days before filing for Chapter 13, you must attend credit counseling.

As with any legal matter, you may want to seek the advice and guidance you need from an experienced bankruptcy attorney.

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