Chapter 13 bankruptcy is for individuals who have some disposable income to put toward their debts but who struggle to meet their current financial obligations. In other words, if you earn too much to qualify for Chapter 7 but not enough to stay on top of all minimum monthly payments, it may be worth pursuing Chapter 13. Here’s what you should know about this approach for discharging debt.

What Is Chapter 13 Bankruptcy?

Often called “reorganization bankruptcy,” Chapter 13 allows debtors to devise a three- to five-year repayment plan for paying back their lenders. Any applicable debts that remain after the agreement has ended are then discharged. In many ways, it’s similar to debt consolidation. Once the repayment plan is underway, borrowers have to make only one monthly payment, which is distributed among multiple lenders. Unlike debt consolidation, though, Chapter 13 can help even those with an overwhelming amount of debt that will never be paid off in this lifetime.

Who Is Eligible for Chapter 13 Bankruptcy?

Chapter 13 bankruptcy has several eligibility requirements. First, you must not have declared Chapter 7 within the past four years or Chapter 13 within the past two years. Second, you must be current on income tax filings. The court will want to review your returns from the past four years, and if you cannot provide them, the case will be dismissed.

There are also financial qualifications. Instead of meeting specific income requirements, though, you must simply be able to demonstrate that you have the means to continue making regular payments on your debts. Finally, your total debt load must not exceed the maximum limit. As of 2019, those who have more than $419,275 in unsecured debt or $1,257,850 in secured debt are ineligible for Chapter 13.

If you want to declare Chapter 13 bankruptcy, turn to Anderson Law Firm. Located in High Point, NC, this practice has been helping clients regain their financial footing for the past two decades. Their bankruptcy attorneys assist both individuals and businesses, and they are well-versed in discharging all kinds of debt. They also help clients who are facing foreclosure and repossession. To discuss your financial situation with a compassionate lawyer on their team, call (336) 431-7336 or reach out on their website.

The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. We are a Debt Relief Agency. We help people file for Bankruptcy Relief under the Bankruptcy Code.