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What are some considerations to make before filing Chapter 13?

On Behalf of | Jul 27, 2020 | Chapter 13 Bankruptcy

Chapter 13 bankruptcy is unique because it allows you a chance to repay your debts and avoid losing your assets to liquidation. However, this option is not for everyone because there are a few requirements you must meet.

According to The Street, the most important aspect of Chapter 13 bankruptcy is that you have an income.

Must be enough

Your income must be enough to allow you to repay priority debts, which are those that you must pay in full. For example, the court cannot discharge child support obligations or money you owe for some types of taxes. If your income is not enough to allow you to pay the priority debts that you have, then you cannot file Chapter 13.

To know if your income is enough, you will need to figure out your regular expenses and subtract those from whatever income you have. This will give you your disposable income, which you can use as your payment.

Then, you need to figure out how much you will owe on priority debts and determine if your disposable income is enough to pay them all within the three to five years of you have for your plan.

Must be steady

Your bankruptcy plan to repay your debts will last three to five years. You must have steady income the entire time to keep making the plan payments. If you work in a field that does not offer steady employment or you have a work history where you change jobs or go without work often, then Chapter 13 may not be for you.