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Who can file for Chapter 13 Bankruptcy?

by | Oct 15, 2019 | Bankruptcy Articles

People who usually qualify for Chapter 13 make enough income to cover their living expenses but not enough to completely pay their debts.
A Chapter 13 reorganization plan allows these individuals to pay off the debt they can afford over time and then eliminate the balance of the debt owed at the end of their plan. When individuals do not qualify to file for a Chapter 7 bankruptcy, they often will be eligible to file for a Chapter 13 bankruptcy because there is no “means test” to disqualify them as there is with a Chapter 7 bankruptcy. In many situations, individuals file for Chapter 13 bankruptcy when they have suffered a temporary loss that makes it impossible for them to promptly pay all of their debt. However, prior to filing a Chapter 13 bankruptcy, it is important to realize that you must have a consistent source of income in order for your repayment plan to be approved by the court. A self-employed individual can qualify as well as the wage earner, as long as the court believes the source of income is sufficient and dependable. You must be able to pay something on your debt in addition to your monthly living expenses in order to qualify.

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