Many people interested in filing for bankruptcy may be deciding whether to file for a Chapter 13 bankruptcy or a Chapter 7 bankruptcy.
Filing for Chapter 13 bankruptcy allows debtors to pay back creditors over a 3-5 year period under a repayment plan. Unlike Chapter 7 bankruptcy, which requires liquidation of several significant assets, Chapter 13 bankruptcy gives people an opportunity to keep their family homes out of foreclosure and hold on to other valuable assets.
Who is eligible for Chapter 13 bankruptcy?
Anyone who has less than $2,750,000 in secured and unsecured debts combined is eligible for Chapter 13 bankruptcy. However, you may not be allowed to file for Chapter 13 if:
- You have filed for bankruptcy at any point during the past 180 days and your petition was dismissed for failure to appear.
- You have filed for bankruptcy at any point during the past 180 days and your petition was dismissed for failure to comply with court orders.
- You have not received credit counseling from an approved agency within 180 days before filing for bankruptcy.
Filing for Chapter 13 bankruptcy
If you choose to file for Chapter 13 bankruptcy, you must file a petition with the bankruptcy court in your area and pay the necessary filing and administrative fees. You must also file several other forms and documents including:
- Schedules of assets and debts, current income, and current expenses.
- Statement of financial affairs.
- Certificate of credit counseling.
- Copy of debt repayment plan.
- List of creditors and claim amounts.
Choosing to file for Chapter 7 or Chapter 13 bankruptcy is a difficult decision that should be made carefully. A bankruptcy attorney can review your financial records and help decide which option is best for you.