Chapter 13 bankruptcy is like a financial reset button that not everyone can press. The ability to do so is restricted to those who fulfill certain requirements. The experts who manage chapter 13 bankruptcy in Baltimore explain that it permits debtors to devise a long-term repayment strategy.
An alternative to Chapter 7 bankruptcy, the wage earner’s plan, as this Chapter 13 version is called, does not have to result in the selling of assets but instead restructures debt compensations throughout 3 to 5 years. Here are the eligibility criteria for this debt relief.
1. Regular Income
It is necessary to have a steady source of income to file for Chapter 13 bankruptcy. Among the allowed sources are wages, salaries, self-employment income, Social Security benefits, pensions, unemployment benefits, and even rental income. They can ensure repayment. A Chapter 13 petition will be rejected if it does not have a consistent source of funding.
2. Debt Limits
For Chapter 13 bankruptcy, there are specific debt limits that are updated frequently to reflect shifts in the consumer price index. As of April 1, 2022, the Chapter 13 debt limitations are as follows:
- Unsecured Debt (personal loans, credit card debt, and medical bills) – less than $465,275
- Secured Debt (mortgages, auto loans, and other loans) – less than $1,395,875
3. Credit Counseling
Before filing for Chapter 13 bankruptcy, you must complete a credit counseling program by an authorized organization. A Baltimore bankruptcy attorney clarifies that it’s to ensure you know all the options for managing your debt. A session usually lasts between sixty and ninety minutes and a certificate of completion will be awarded to you. This will need to be presented to the court.
4. Filing Fees and Costs
The cost of the credit counseling course, filing fees, and attorney fees are all associated with filing for Chapter 13 bankruptcy. As of 2024, the filing fee is $313. Depending on how complicated your case is, a lawyer may charge you anywhere from $3,000 to $6,000 if you retain one. The expenses might seem expensive, but they are frequently covered by the repayment plan.
5. Sufficient Disposable Income
The court will consider disposable income in addition to regular income when deciding on your Chapter 13 application. The amount of money left over after covering needs like housing, food, utilities, and transportation is known as disposable income. The repayment plan must be paid for by your discretionary income. You have to give the court a detailed budget that shows your sources of income and expenses during the bankruptcy.
6. Not a Business
A business is not allowed to declare bankruptcy under Chapter 13. Instead, a company is advised to file for Chapter 11 bankruptcy. Individuals may still file for Chapter 13 bankruptcy if they have personal debts that are related to the business. The business, however, will still be liable for that debt.
The Way to Financial Recovery
Chapter 13 is a plan for financial rehabilitation. Chapter 13 bankruptcy in Baltimore explains that it provides a way of paying debts without losing hard-earned assets. It must, however, be carefully planned and operated under ideal circumstances. For that, you’ll need advice from an experienced bankruptcy attorney. Call Richard Hackerman at 410-243-8800 or 888-243-5500.
