Filing Chapter 13 bankruptcy is a great option for many debtors. However, some debtors are not eligible to file this type of bankruptcy. Find out who can file Chapter 13 and who cannot so you will be able to make an informed decision if you have to file for bankruptcy.
A Business Is Not Eligible To File For Chapter 13
Business owners, even those who operate businesses as a sole proprietorship, are not eligible to file for Chapter 13 under the business’s name. Most business owners file for Chapter 11 if they need help reorganizing their debts.
Business owners can file for Chapter 13 if they choose to file as an individual debtor. Debts related to the business can be included if he or she is the only one liable for the debts. The only exception to this rule is individuals who are financial brokers.
You Must Have Enough Income
When wondering who can file Chapter 13, individuals must have enough income to qualify. The bankruptcy court will want to verify that you have enough disposable income after paying your expenses and other payment obligations. You must have enough income to make the repayments that the court approves. Income sources can include one or more of the following:
- Sales commissions
- Self-employment income
- Government benefits (welfare)
- Child support
- Alimony
- Seasonal work income
- Benefits from social security
Individuals who are married can use the income from their working spouse as a source of income even if they are filing alone. The unemployed spouse can also choose to file with the working spouse.
Income Tax Filings Must Be Current
You will also need to provide proof that you filed your federal and state tax returns for the four years before the date you filed for bankruptcy. If you need to file returns, the court may decide to postpone your case. However, if you fail to show proof of filed returns, your case will ultimately be dismissed.
Your Debts Cannot Be Extremely High
Your secured debts cannot be more than $1,149,525. Keep in mind this amount can fluctuate due to inflation. Unsecured debts cannot exceed $383,175. This amount is also adjusted periodically.
Those who want to know who can file Chapter 13 should meet with a knowledgeable bankruptcy attorney in their area. Together you can investigate your current financial situation and determine if you are eligible to file.
For more information on eligibility and to learn is chapter 13 is worth it, contact us for a free consultation today.
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