For many of those in extreme debt, Chapter 13 bankruptcy is a shining beacon of hope and relief. Not everyone qualifies, however, for Chapter 13 bankruptcy in California. It’s also noteworthy, that like all decisions, the decision to declare bankruptcy comes with advantages and disadvantages. A Chapter 13 bankruptcy can take up to five years to complete and will disqualify you from filing for Chapter 7 bankruptcy for at least 6 years. Chapter 13 bankruptcy does, on the other hand, afford you more time to make your payments, and to keep your secured interest property. With that said, consulting a local bankruptcy attorney will give you a better idea of the other pros and cons, but let’s look at what it takes to qualify and file for a Chapter 13 bankruptcy.

Am I Eligible for Chapter 13 Bankruptcy?

First and foremost, businesses are barred from filing Chapter 13 bankruptcy and must utilize Chapter 11 bankruptcy instead (although the owner can file Chapter 13 if the majority of their debt is consumer debt). Additionally, in order to file a Chapter 13 bankruptcy, you must not have filed Chapter 13 bankruptcy in the past two years or Chapter 7 bankruptcy in the last 4 years. Chapter 13 bankruptcy requires that the debtor has filed income tax returns for the last 4 years and that your debt isn’t too high. In order to qualify for Chapter 13 bankruptcy, your total unsecured debt must be under $394,725 and your secured debt limit must be below $1,184,200.

Probably the most important aspect of being eligible for Chapter 13 bankruptcy is the ability to show the bankruptcy court a steady source of income from a job, self-employment, social security, or other types of benefits such as unemployment or disability. Furthermore, your Chapter 13 repayment plan must pay all required priority debts and secured debts in order to be approved by the bankruptcy court.

Before you go to file Chapter 13 bankruptcy you must have attended credit counseling with an approved credit counseling agency in the last 180 days. Upon completion of the credit counseling course, you are given a certificate which will be included in paperwork file with the bankruptcy court.

Find a Local Bankruptcy Attorney

Many individuals wait far too long to file bankruptcy and miss out on valuable time they could be using to pay down their debt. If you have struggled to make monthly payments, have been sued over a debt, and/or are at risk of losing your home or automobile, it’s time to contact your Sacramento bankruptcy attorney. Not only can a bankruptcy lawyer give sound legal advice to you concerning your bankruptcy, but can help guide you through the process and ensure you get the debt relief you need.