1. Do You Have a Reliable Source of Income?
In order to be eligible for a chapter 13 your income should be steady, periodic, and likely to continue. That doesn't mean you need to be earning the same amount with every paycheck. Whether you get paid weekly, monthly or even annually, the court just needs to know that you indeed have a constant, flowing source of income. This can be from wages, child support, unemployment, seasonal work, alimony, welfare, worker's compensation, or almost any other form of incoming gains.
2. Do You Make Enough to Pay The Court?
Chapter 13s require you earn enough money to pay the court fees on top of any other necessary expenses that you may have. The amount the court requires is largely dependant on your own personal situation. Some of the major factors they tend to take into account when determining your fees are the type and amount of debt you owe, the value of any property or assets, the length of your payment period, and the manner in which the court decides you must pay the debt back.
The state and federal district you file in can also impact your conditional bill. For example, filing a chapter 13 in Orem Utah may cost less than driving up the road and filing a chapter 13 in Salt Lake Utah. This price shift can generally be attributed to the different interpretations of the laws, rules, and regulations by each court.
3. Do You Exceed The Debt Limit?
There are two types of debt, both with separate ceilings, or maximums in order to be eligible to file for a chapter 13 bankruptcy.
Secured Debt
A debt is secured if you lose property by not making the required payments. The most common examples of this are home and car loans; failure to make a payment on these could result in a repossession of the asset or property. As of April 1, 2014 the secured debt limit is $1,149,525 - having more than that deems you ineligible to file.
Unsecured Debt
With an unsecured debt limit of $383,175, these debts are those which lack a pledged collateral for payment failure. Common examples of this are medical and credit card debt, student loans, and legal bills. Any debt that isn't related to property you possess is most likely unsecured.
Note: if your debts exceed either limit, you can still file for a chapter 7 bankruptcy!
4. Are You Filing As a Business?
Businesses can file bankruptcy too. Although business entities are not eligible to file chapter 13 bankruptcy, the owner may be able to file a chapter 13 if he or she is personally liable for the bussiness's debts. In situations where an individual is not liable for the debt, a business can file a chapter 11 bankruptcy, which is usually more expensive and complex than personal bankruptcy.
To conclude, while chapter 13s are a more complex form of bankruptcy and there are limitations for those that can file, they have great benefits such as being able to protect more property, catch up on arrears on a mortgage, and much more. Whether you need to file a chapter 13 in Utah, California or anywhere else, it's worth hiring an experienced attorney that can save you time and money. At Lincoln Law we offer a free, professional and private consultation to talk about your situation, determine your financial options and help guide you to the a solution that's right for you.