There are many different bankruptcy options available to debtors in a variety of situations. However, debtors need to show that they are eligible for a certain bankruptcy chapter to file.
Chapter 13 bankruptcy is desirable for several reasons. First, it limits debtors' vulnerability to losing their assets, most notably their home and their car. This is because the filing is a repayment process instead of a liquidation process. Second, Chapter 13 bankruptcy usually results in fewer damages to a debtor's credit than Chapter 7 bankruptcy, for example.
If you are considering filing for Chapter 13 bankruptcy, it is important that you have a good understanding of the eligibility requirements before taking action.
You must be an individual
Businesses, even sole proprietorships, are not eligible to file for Chapter 13 bankruptcy. This means that in order to file you must show that you are doing so as an individual.
You must have an income
Engaging in Chapter 13 bankruptcy means engaging in a repayment plan. This means that you need to be earning a stable income over time that allows you to steadily pay back your debts. If you are unemployed, filing for Chapter 7 bankruptcy is likely a better option for you.
You must have been paying taxes
When filing for Chapter 13 bankruptcy you will need to give proof that you filed state tax returns in the last four years. If you cannot do this, you will encounter significant problems in being able to file.
If you are struggling with debts, filing for bankruptcy could be a great option for you. It is a good idea to learn about all bankruptcy options before making a commitment.