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Bankruptcy May Be Your Option

Who is eligible to file for Chapter 13 bankruptcy?

In an earlier post, we discussed the advantages of filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy, which is also known as reorganization bankruptcy, can help you save your home from foreclosure, create new payment plans for certain debts, and provide a buffer between you and your creditors. Oklahoma residents who wish to file for Chapter 13 bankruptcy must meet specific requirements.

Under the bankruptcy code, only certain debtors qualify to file for Chapter 13 bankruptcy. First, you must be an individual, not a business entity. Most individuals, including those who are self-employed or are the owners of unincorporated businesses, qualify for Chapter 13 bankruptcy. Corporations or partnerships do not qualify. 

Second, you cannot file for Chapter 13 bankruptcy if your debts are too high. According to the bankruptcy code, your unsecured debts must be less than $383,175 and your secured debts must be less than $1,149,525 to be eligible for Chapter 13 relief.

Third, you may not be eligible if you previously declared bankruptcy. If you discharged your debt through Chapter 13 bankruptcy within the past two years or if you discharged debt through Chapter 7 bankruptcy within the past four years, you must wait before you can file for bankruptcy again.

Moreover, if you had a bankruptcy petition dismissed within the last 180 days due to your failure to appear in court or to comply with court orders or if your petition was dismissed after creditors sought to recover property upon which they have a lien, you cannot file for bankruptcy at this time.

Fourth, you must have fulfilled a credit-counseling requirement to be eligible for Chapter 13 bankruptcy. You must file a certificate of proof that you received credit counseling from an approved agency at least 180 days before filing your bankruptcy petition.

Finally, you must provide proof that you filed your federal and state income tax returns for the past four years. Failure to do so means that you is not eligible for Chapter 13 bankruptcy.

If you are thinking about filing for Chapter 13 bankruptcy, you should consult an attorney. Declaring bankruptcy is a big deal, and you should understand all of the consequences before you do so.

Source: USCourts.gov, “Chapter 13 – Bankruptcy Basics,” Accessed Nov. 16, 2015

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