Once you have decided that filing for Chapter 13 bankruptcy is the best way for you to get back on solid financial footing, you need to make sure that you qualify for it. There are certain requirements that must be met by every filer, but don’t stress out about it too much. A Bergen County Chapter 13 bankruptcy lawyer from our firm can tell you what’s required before you start the process.
How Do I Qualify to File Chapter 13 Bankruptcy?
If you want to file for Chapter 13 bankruptcy, you must meet the following criteria:
You must have enough income: You are going to make a payment plan as a part of this deal, so you have to show that you will have enough income to make payments to your creditors for three to five years, depending on how long your plan lasts.
Tax filings must be current: If you did not file taxes for the past four years, you are going to need to do that before starting the bankruptcy process.
Debt cannot be too high: There are limitations on how much debt a Chapter 13 bankruptcy can handle and they can change each year. If you have too much of either unsecured or secured debt, you may need to explore other options.
Why File For Chapter 13 Bankruptcy?
Chapter 13 bankruptcy puts a stop to collection activities and allows you to pay off your debts over time. If you are having your wages garnished and you don’t even know where to start when it comes to tackling your debt, this process can help you make a plan for emerging debt-free and satisfying your creditors.
Is This an Option If I Run a Business?
Businesses tend to use other types of bankruptcy, like Chapter 11. However, a sole proprietor of a business can use this form of bankruptcy if the debts of the business are considered their debts as well. This is something you’ll want to talk over with a lawyer before making any major decisions.
Will I Have to Pay Debts in Full in Chapter 13 Bankruptcy?
Not necessarily. Many unsecured debts get partially paid off with your payment plan and your creditors accept it. They would rather get some money than none.
When it comes to secured debts, a debt with some kind of object backing it, you usually must pay what you owe if you want to keep that particular session. Some good examples of this would be cars or homes. If you want to keep your home or car, you need to pay your creditors for them.
There are also “priority” debts that are unlikely to be reduced in payment plan negotiations. Some common examples of this are child support and alimony. You made a deal to make these support payments, so you have to pay any back payments that you owe and continue making payments in the future.
Schedule Your Consultation
When you are ready to learn more about the bankruptcy process, contact the Law Office of Boyd & Squitieri. We can schedule a consultation for you and help you carefully evaluate all of your options.
