Massachusetts residents who are experiencing financial problems will frequently be confused as to how to rectify them and what options are available to do so. It can be overwhelming to be in significant debt. Often, people do not know how to get the fresh start they so desire. One alternative under the bankruptcy code is Chapter 13. Chapter 13 is known as a “wage-earner’s plan.” The eligibility requirements for Chapter 13 must be understood before pursuing it as an option.
A person can file for Chapter 13 if the unsecured debts fall below $394,725 and the secured debts are below $1,184,200. This is a possibility even for a person who is self-employed or operates an unincorporated business. These amounts are altered intermittently based on the consumer price index. The debtor cannot file for Chapter 13 or any other chapter in the bankruptcy code if a bankruptcy petition had been dismissed within the previous 180 days due to the debtor willfully failing to appear before the court or adhere to orders, or if it was voluntarily dismissed after creditors sought to get relief to recover property upon which they have liens.
It is also necessary to have credit counseling from an approved agency within the 180 days before filing. This can be as an individual or in a group briefing. If it is an emergency circumstance or the U.S. trustee or bankruptcy administrator came to the determination that there was not a sufficient agency to provide that counseling. If there is a debt management plan formulated with credit counseling, it should be filed with the court.
When confronted with financial challenges that have become suffocating, there are ways for a person to get out from under those debts and move on. Understanding what the eligibility requirements for Chapter 13 are is key to using it for debt relief. A lawyer can help to determine if Chapter 13 should be used or another method of getting out of debt is preferable for the situation.
Source: uscourts.gov, “Chapter 13 — Bankruptcy Basics — Chapter 13 Eligibility,” accessed on June 12, 2017