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Are you eligible for Chapter 13 bankruptcy?

Most people think of bankruptcy as being a last resort. It usually has a negative connotation and people generally think of it as being a sign of failure. Bankruptcy is not a way to get completely out of debt, or a financial surrender. Instead, it is a tool to manage debt. Chapter 13 is especially useful for individuals like you, who have are drowning in debt due to extensive medical expenses.

After a specialist diagnosed your oldest son with a rare illness, it was impossible to keep up with your mortgage payments, car loan, and the medical expenses your insurance did not cover. Fortunately, there are steps you can take to manage your debt while keeping your house and vehicle. Chapter 13 bankruptcy offers a solution so that you can repay your creditors over a three to five year period while keeping your property. Read below for the requirements you must meet to qualify for Chapter 13.

You cannot be a business entity

In order to qualify for Chapter 13, you must file as an individual or jointly with your spouse. The law disqualifies corporations and limited liability companies from filing for this type of bankruptcy. Instead, they must file for Chapter 11.

You must be free of prior bankruptcy filings

If you have filed for Chapter 13 within the last two years, the court will automatically bar you from filing again until the requisite time has passed. In addition, if you filed for Chapter 7 bankruptcy within the last four years, the court will deny your Chapter 13 request until you reach the time threshold.

Clear for 180 days

If you filed a previous petition for Chapter 13 or 7 within the preceding 180 days and the court dismissed it, you must wait until the time requirement has passed. The reasons for dismissal include the willful violation of a court order or failure to appear before the court. In addition, if you requested the court to dismiss the case after a creditor requested that the court remove an automatic stay, you must wait the 180 days before you can file again.

You must complete credit counseling

To qualify for Chapter 13, you must present the court with a certificate of proof that you completed an approved credit-counseling course at least 180 day before you filed. If the agency helped you to create a debt management plan, you must also present that to the court. You have to file this paperwork within 15 days of petitioning for Chapter 13.

Your debt is under the prescribed limit

Chapter 13 sets limits on how much debt you can have. Your unsecured debt, which includes credit card debt and medical bills, must be less than $336,900. Secured debt, such as your car loan, which is secured by the vehicle itself, must be less than $1,010,650. These limits are adjusted every three years to allow for inflation.

Other requirements

Chapter 13 bankruptcy also requires that you provide copies of your filed tax returns for the previous four years. Furthermore, you will have to pay some debts in full. This includes your mortgage and car loan. Since Chapter 13 restructures your debt so that it is more manageable, you must earn enough income to make the required payments after deducting your allowable living expenses.

Filing for bankruptcy can be a difficult process. Before you start the process, you should understand your rights and options. Contact a local Mississippi bankruptcy attorney for help in filing your Chapter 13 petition.

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