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Chapter 13 bankruptcy is a viable option for those who qualify

When a person's mounting debt becomes too overwhelming, it can cause feelings of stress, fear and panic. People may fear losing their homes or other possessions, and they may be trying to ignore phone calls from debt collectors. They may wonder if there is anything that can be done. For some people in Louisville, filing for Chapter 13 bankruptcy is an option. However, there are certain circumstances under which a person cannot file for Chapter 13 bankruptcy.

First, a person is barred from filing for Chapter 13 bankruptcy, if within the previous two years that person received a Chapter 13 discharge or if within the previous four years that person received a Chapter 7 discharge. Moreover, a person is barred from filing for Chapter 13 bankruptcy if a previous petition for bankruptcy was dismissed by the court within the previous 180 days. In addition, the person violated a court order or did not attend court when he or she was supposed to, or if the person asked the court for a dismissal after a creditor requested that the automatic stay against them be lifted. There are also credit-counseling requirements that must be met.

Further, unbelievably, a person cannot have too many debts to qualify for Chapter 13 bankruptcy. It is only an option for those whose unsecured debts are under $336,900 and whose secured debts are under $1,010,650. A person must also show proof that he or she filed their federal income taxes the past four years.

Moreover, under a Chapter 13 bankruptcy plan, a person must be able to pay back certain debts in full, such as secured debt, and must be able to pay back at least a certain amount of unsecured debt. Finally, a person must earn enough income to pay back his or her debts to qualify for Chapter 13 bankruptcy.

While this may seem like few people would qualify for Chapter 13 bankruptcy, in fact, it is a viable option for many. A bankruptcy attorney may be able to advise those interested in filing for bankruptcy whether Chapter 13 is right for them.

Source:, "Who Can File for Chapter 13 Bankruptcy?," accessed on Dec. 17, 2016

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