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 file Chapter 13 so you will be able to make an informed decision if you have to file 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 name of the business. Most business owners file for Chapter 11 if they need help reorganizing the debts of the business.
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 who is 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 your expenses and other payment obligations have been paid. You must have enough income in order to make the repayments that are approved by the court. Income sources can include one or more of the following:
- Sales commissions
- Self-employment income
- Government benefits (welfare)
- Child support
- 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 your federal tax returns and state tax returns have been filed for the four years previous to 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 Chapter 13.
For more information on Chapter 13 eligibility, contact us for a free consultation today.