Qualification for a Chapter 13 Bankruptcy

Many of our clients find a Chapter 13 bankruptcy filing is by far the most powerful and effective strategy for a person struggling with non-cooperative creditors.

Chapter 13 isn’t even really “bankruptcy” in the traditional sense of the word but is more of a “Wage Earner’s Repayment Plan.”

In order to qualify a client for chapter 13 we only need to show the client has minimal income after the payment of secured debts (mortgages, car payments, etc.) and basic lifestyle needs ( food, utilities, etc.).  The payment to unsecured creditors can be as little as $20 a month and still qualify.

Further good news is that you don’t have to figure this all out on your own.  Kerry Hettinger, PLC works with you to create a repayment plan that saves you the most money possible.

Among the most common reasons for filing a Chapter 13 rather than a Chapter 7 (full bankruptcy) are the following:

1. Ch 7 would result in loss of something one really needs to keep (house, car, business, farm, etc.).

2. Client makes too much money to file a Ch 7 but not enough to pay off their debt.

3. Client filed a Ch 7 less than 8 years ago (only 4 years for a Ch 13).

4. Certain debt not dischargeable in a Ch 7 can be discharged or managed much better in a Ch 13 (tax, student loan, fraud, etc.).

Because of the many advantages of a Chapter 13 over other ways to deal with debt, Congress created additional qualification tests.  The two primary tests have to do with who can file a Chapter 13 and how much debt they can have.  First, only a person can file a chapter 13 (no Corps or LLCs).  Second, because it is inexpensive to file and very convenient, a Chapter 13 Debtor can only have so much debt ($360,475 unsecured, $1,081,400 secured).

Call today to have any questions answered and see if you qualify for this powerful form of debt management.


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