Chapter 13 bankruptcy can help people burdened by an overwhelming financial situation renegotiate their debts, as long as they have a steady income to cover the necessary payments.
If you are considering your bankruptcy options because you cannot pay your debts, a Jacksonville attorney can determine your eligibility to file under Chapter 13 and give you peace of mind throughout the process.
Who Qualifies for Chapter 13 Bankruptcy?
Before the courts accept a Chapter 13 bankruptcy repayment plan, you’ll need to show that you’re current on tax filings, within the debt limitations prescribed by the bankruptcy court, employed with enough income to make monthly payments, and are not a corporation. However, a sole proprietor can roll the financial aspects of a business into Chapter 13. A bankruptcy lawyer in the area can determine whether you qualify to file Chapter 13 bankruptcy.
Income Tax Filings Must be up to Date
Florida Debtors must prove they filed federal income taxes for the three years prior to filing for Chapter 13 bankruptcy. It is within your right to ask the bankruptcy court for time to file back taxes, but there is no guarantee the court will allow this. If you have not filed your last three years to tax returns, our law firm can recommend a reasonably-priced certified public accountant to get your taxes filed as soon as possible.
Debtors Must Show Enough Disposable Income
Chapter 13 requires filers to have enough disposable income to pay back debt renegotiated with creditors. Disposable income must cover allowable expenses and required payments that are secured, such as a mortgage.
Some of the sources used to fund a Chapter 13 plan include:
- Wages and salary, including income from self-employment, seasonal work, or sales commissions
- Pension payments
- Social Security benefits
- Disability or benefits from workers’ compensation, unemployment, welfare, and strike benefits
- Alimony and child support
- Rents and royalties
- Proceeds from the sale of property
Married, unemployed debtors filing as an individual can use a working spouse as a source of income or file jointly with an employed spouse. A local bankruptcy lawyer can assess your situation to determine eligibility for Chapter 13.
Debts Cannot Be Too High
Debtors qualifying for Chapter 13 must fall below a debt ceiling. If your debts exceed this limit, you may need to file under Chapter 11 of the Bankruptcy Code. As of 2019, debt limits are $419,275 in unsecured debt and $1,257,850 in secured debt. This limit is good for three years until April 2022. Secured debt is backed by collateral, such as a home or automobile. Unsecured debt is usually credit card, medical, or back utility company debt.
Businesses Cannot File Chapter 13 Bankruptcy
Businesses cannot file for Chapter 13 bankruptcy protection and usually file Chapter 11 to reorganize debts. However, a sole proprietor is responsible for both business and personal debts, so these debts are included in Chapter 13 bankruptcy to reorganize both personal and business obligations. A sole proprietor can be liable for individual and business debts.
Restrictions apply for stockbrokers and commodity brokers, who are not eligible to file Chapter 13 even if they intend to discharge only personal debts.
Filing a Chapter 13 Bankruptcy
Debtors filing Chapter 13 bankruptcy provide the court with financial papers detailing income, expenses, assets, and creditors. Once the forms, filing fee, and proof of credit counseling are submitted to the court, the case is underway. At this point, you’ll have 14 days to submit the Chapter 13 plan to repay debts.
Let a Jacksonville Attorney Assess Your Eligibility for Chapter 13 Bankruptcy
Deciding which bankruptcy chapter is right for you may require assistance from a seasoned attorney who can assess your eligibility for a Chapter 13 bankruptcy in Jacksonville. Call to schedule your initial consultation and learn how one of our qualified legal professionals can aid your case.