Should i file chapter 13

In Chapter 13 bankruptcy you must pay for the value of the nonexempt assets you keep through your three- to five-year repayment plan. So, if you have nonexempt property that you can't bear to part with, Chapter 13 bankruptcy might be the better choice—if you can afford to pay for your nonexempt assets in addition to other required payment amounts. If you file for Chapter 7 bankruptcy, your codebtor will still be on the hook, and your creditor will undoubtedly go after the codebtor for payment.

By contrast, if you file for Chapter 13 bankruptcy, the creditor will leave your codebtor alone, as long as you keep up with your bankruptcy plan payments. Learn more about what happens to codebtors in bankruptcy. Some debtors cannot file for Chapter 7 bankruptcy. Chapter 13 bankruptcy as the only option. This will be the case if both of the following are true:. The means test can get fairly complex, and, to make matters worse, uses unique definitions of "disposable income," "current monthly income," "expenses," and other important terms, which sometimes operate to make your income seem higher, and your living expenses lower, than they are.

For more information, including links to the median income in your state, see The Bankruptcy Means Test. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.

The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. Find out if Chapter 13 bankruptcy is a better option for you than Chapter 7 bankruptcy. Here are more good reasons to file for Chapter 13 bankruptcy. When Chapter 13 Might Be Better Than Chapter 7 Even if you are eligible for Chapter 7 bankruptcy, there are some situations when filing for Chapter 13 bankruptcy might be more advantageous than filing for Chapter 7 bankruptcy.

Catch Up on a Mortgage or Car Loan in Chapter 13 In Chapter 13 bankruptcy, you can make up the missed payments over time and keep a home or car. Pay Other Debt Over Time in Chapter 13 When you have creditors coming after your wages and property, it can be tough to keep a roof over your head while paying your debt.

To qualify for Chapter 13 bankruptcy:. You cannot have filed for Chapter 13 bankruptcy in the past two years or Chapter 7 bankruptcy in the past four years. You cannot have filed a bankruptcy petition Chapter 7 or 13 in the previous days that was dismissed for certain reasons, such as failing to appear in court or comply with court orders.

Even if you qualify for Chapter 13 bankruptcy, make sure you know the difference between Chapter 7 vs Chapter 13 bankruptcy. Look into whether you have too much debt. When considering bankruptcy, meet with a credit counselor from a nonprofit credit counseling agency and with a bankruptcy attorney.

Both initial consultations should be free. These meetings will help you understand your circumstances and decide whether bankruptcy is the best route to get your finances back on track. In Chapter 13 bankruptcy, you and your attorney will work to prove your eligibility for a debt reorganization to a bankruptcy trustee, who administers the proceedings.

You'll pay over three to five years and will retain your assets. At the end, the remainder of some debts may be forgiven. Credit counseling: Complete pre-filing bankruptcy counseling through a nonprofit credit counseling agency. Your counselor may also help you draft a repayment plan. Get an attorney : Hire a qualified bankruptcy attorney. Chapter 13 is very complex, and skipping a step or improperly filling out a form can lead to your case being thrown out or not having certain debts covered.

Fill out paperwork: Your attorney will help you fill out the various forms required to file. A bankruptcy trustee will be appointed. If you need some time to get current on your filings, the court can postpone the proceedings but you don't want to count on this.

Ultimately, however, if you don't produce your returns or transcripts of the returns for those four years, your Chapter 13 case will be dismissed. To qualify for Chapter 13, you will have to show the bankruptcy court that you will have enough income after subtracting certain allowed expenses and required payments on secured debts such as a car loan or mortgage to meet your repayment obligations.

Your plan must pay back certain debts in full, or the judge will not confirm approve it and allow you to proceed. If you are married, your income does not necessarily have to be "yours. And an unemployed spouse can file jointly with a working spouse. It's true that many people prefer to file for Chapter 7 bankruptcy because it doesn't require the filer to pay back creditors. But some debtors simply don't qualify. Others, however, choose to file for Chapter 13 bankruptcy because it provides options that Chapter 7 doesn't offer, making a Chapter 13 case the better choice.

You won't qualify for Chapter 13 bankruptcy if your secured and unsecured debts exceed certain amounts. The debt figures change every three years. A debt is secured if you stand to lose specific property the property you pledged as collateral if you don't make your payments to the creditor. Home loans and car loans are the most common examples of secured debts.

But a debt might also be secured if a creditor—such as the IRS—has filed a lien notice of claim against your property. An unsecured debt doesn't give the creditor a right to take a particular piece of property. Most debts are unsecured, including credit card debts, medical and legal bills, back utility bills, and department store charges. A business cannot file for Chapter 13 bankruptcy in the name of that business. Businesses are steered toward Chapter 11 bankruptcy when they need help reorganizing their debts.

An exception exists, however: Although a sole proprietor cannot file in the name of the business, both business and personal debts are the responsibility of the individual, and therefore, are included in the bankruptcy filing. Therefore, Chapter 13 can effectively help reorganize a sole proprietor's business.

You can, however, file for Chapter 13 bankruptcy as an individual even if you own a business. You'll include business-related debts for which you are personally liable in your Chapter 13 bankruptcy case. But, the business will remain liable for the debt.