Chapter 13 Bankruptcy Filing: What You Need to Know
Who can file for Chapter 13 bankruptcy, and what do you have to repay? Will you be able to keep your belongings?
These are just a handful of the most common questions we hear in our office about wage earner’s plans—but the good news is this: If you’re thinking about filing for Chapter 13 bankruptcy, you’re not alone. Working with a Maryland Chapter 13 laywer can help you make the process go as smoothly as possible as you restructure your debt and create a payment plan that results in you getting a fresh financial start.
Who Can File for Chapter 13 Bankruptcy?
In order to file for this type of debt relief, you have to meet certain requirements. If you don’t, you’ll have to file for another type of bankruptcy or find a different solution. Business entities can’t file for Chapter 13 (although sole proprietors can), so that means your corporation or LLC cannot use this law for debt relief.
You may not have discharged debt through this type of bankruptcy within the past 2 years or through a Chapter 7 bankruptcy within the past 4 years. You can’t use it if the courts dismissed a prior bankruptcy petition within the past 180 days, either.
- Show proof that you’ve completed credit counseling with an approved agency within the past 6 months
- Owe less than $336,900 in unsecured debt
- Owe less than $1,010,650 in secured debt
- Have filed your income tax returns for the previous four years (both state and federal)
- Have enough income to repay your debts
What Do You Have to Repay Under Chapter 13?
It’s different from a Chapter 7 bankruptcy in that it allows you to keep your property—but it also requires you to pay back most of your creditors without discharging debts like Chapter 7 does.
The law requires you to repay some debts in full, categorizing them this way:
- Priority debts. Priority debts are unsecured debts such as child support, spousal support, and taxes that are not dischargeable.
- Mortgage and car loans. Some secured debts, such as mortgage loans and car loans, must remain current while you’re implementing your repayment plan. (You can also use a Chapter 13 bankruptcy to stop foreclosure.)
- Some secured debts. You must pay debts you owe due to judicial or tax liens during your discharge process.
You’ll also have to repay some non-priority unsecured debts. Because you’re keeping your property rather than liquidating it as you would in a Chapter 7 bankruptcy, you’ll have to repay your creditors at least as much as that property’s value. (What that means is you’re keeping your appliances, your cars, and other assets; your creditors are sometimes entitled to be repaid the amount they’d get if you had liquidated that to repay them instead.)
Do You Need to Talk to a Bankruptcy Lawyer in the DMV?
From Baltimore to D.C. to NoVa, we’ve helped people get the debt relief they so desperately needed through Chapter 13 bankruptcy—and we may be able to help you, too.
Call us at 301-933-2595 for a free bankruptcy consultation in Maryland, D.C., or Virginia. We’ll analyze your situation and help you understand your options today.