How Hard Is It to Qualify for Chapter 13 Bankruptcy?

Bankruptcy is a big step, and it's something the courts don't take lightly. A trustee will review all your paperwork and make sure everything is in order, but before your bankruptcy is granted, the court will also make sure you meet all the criteria. Below are a few of the top things you need to know to give yourself the best chance of being approved for Chapter 13.

The Craig Black Law Firm has extensive experience with Chapter 13 bankruptcies and regularly guides filers through the process. If you're considering bankruptcy, get in touch with me at 678-888-1778 or complete this confidential contact form, and I'll be in touch.

Income Requirements

Courts grant Chapter 13 with the expectation that you'll repay outstanding debts. This means you'll need some money coming in. While there's no minimum income requirement to file for Chapter 13 bankruptcy, your income will be taken into account. You'll need to have enough coming in to meet all your obligations, including the payment plan that will be set up if your bankruptcy is granted.

Debt Limits

Since Chapter 13 requires your debts to be paid through a repayment plan, the amount you owe will need to be achievable. Chapter 13 was limited to those with $2.75 million in unsecured debts, but that provision was sunset as of June 01, 2024. Now there is a 2-part test setting the maximum limits to $465,275 for unsecured debt and $1,395,875 for secured debt.

Bankruptcy History

Have you filed for bankruptcy before? If not, disregard this section. If so, you'll need to look at the restrictions on subsequent bankruptcies before filing. The waiting period between bankruptcies depends on the type of bankruptcy.

It's important to note that the waiting period for Chapter 7 is much longer since Chapter 7 is a complete discharge of eligible debt. If you're granted a Chapter 13 bankruptcy, you may have to wait as long as six years to file for Chapter 7.

There are restrictions on how often you can receive a discharge. For Chapter 7, it is 8 years. For Chapter 13, it is 2 years.

Credit Counseling Completion

Before the court will grant a Chapter 13 bankruptcy, you'll need to show a certificate of completion for a credit counseling class. This class must be conducted by a court-approved credit counseling agency and must have taken place within 180 days of filing.

But your education doesn't end once your bankruptcy is granted. The court will require a certificate of completion for a second course, known as debtor education. You'll also have to go through a court-approved service for this part of the process. Once you've completed the course, the court can approve your debt discharge.

Getting Chapter 13 Approval

Before filing Chapter 13, make sure you have the best chance possible of success. I can review your situation and help guide you as you file your paperwork. If you're considering bankruptcy, give me a call at 678-888-1778 to discuss how I can help you. You can also complete my confidential online form to get in touch with me.