Chapter 13 Bankruptcy Eligibility

• No Exceeding Debt - Bankruptcy laws require debts by the filer, whether secured or unsecured,  not exceed certain amounts. If your unsecured debt burden exceeds $394,725, or your secured debt burden exceeds $1,184,200, you will be ineligible for this type of bankruptcy protection. 
• Regular Income - When you file your Chapter 13 case, you have to be able to prove to the court that you can both meet your monthly household needs, while also being able to maintain a repayment plan that could include monthly payments as well. If your income is not steady, or disposable income is too low, the bankruptcy judge won’t approve your case. 
• Previous Bankruptcy Filings - You will not be eligible if you have filed for Chapter 13 in the past 2 years, Chapter 7 in the past 4 years, or had filed a bankruptcy petition in the last 180 days that was dismissed. 
• Personal, Not Business Use - This chapter is only available to individual use, and not to companies. However, business-related debts that the individual is personally responsible for can be included in the plan.

The Chapter 13 Bankruptcy Process

During traditional bankruptcy proceedings, debtors will be able to propose a repayment plan to the creditors and the bankruptcy court, detailing all of your debts and how you plan to repay them over a period of time. The court will then hear any objections, and then confirm the plan on the basis that it is feasible, compliant and proposed in good faith. 

You will then make a monthly payment to a court-appointed bankruptcy trustee, who distributes your money to your creditors. Debts will be wiped out only when the 3-5 year repayment plan has been completed.

In order to be considered eligible for a Chapter 13 filing in Greensboro, NC, you must receive mandatory pre-filing credit counseling through a nonprofit credit counseling agency. This credit proves that you have sufficient income to meet the filing requirements. After filing, you also will have to take a second debtor education course, to be completed by the end of your payment plan.

If at some point during the course of your plan your financial situation changes and you are unable to make the payments, you may be able to appeal to the court and modify the amount being paid to your unsecured creditors. If this isn’t feasible, you may be able to switch to a Chapter 7 bankruptcy case or dismiss your Chapter 13 case. If you are falling behind in payments, speak to a bankruptcy lawyer on the best option moving forward. 

A Chapter 13 case is resolved when the repayment plan has been completed, the budget counseling course has been completed, and all obligations of child support or alimony are current. All of your debt will then be wiped free, except for any applicable mortgages or student loans.