A Chapter 13 bankruptcy filing can be a great help to cure mortgage arrears or discharge debts if Chapter 7 is not feasible. However, Chapter 13 is not for everyone. Below are the major eligibility requirements.
Who Can File for Chapter 13 Bankruptcy?
1. Consumers Only. You must be an individual consumer to file. Businesses cannot file, although self-employed individuals who operate their own business can.
2. Regular Income. You must have a regular source of income and it must be sufficient to pay your day-to-day living expenses. There must be enough left over to pay the monthly Chapter 13 plan payments.
3. Jurisdictional Requirements. You must reside in, or have a domicile, a place of business, or property in the United States or a municipality. You do not have to be a U.S. citizen.
4. Prior Bankruptcy. Technically, you must not have had a prior bankruptcy filing dismissed for cause within the last 180 days, but if you had, you may still be eligible to file a Chapter 13 bankruptcy case if you have a change of circumstances.
5. Debt Limitation. Chapter 13 bankruptcy is designed for individuals who do not have an excessive amount of debt. Eligibility requires that your debts cannot exceed $1,010,650 for secured debt (mortgages and car loans). In addition, debts cannot exceed $336,900 for unsecured debt (most other debts like credit card debt, personal loans, medical bills, and utility bills). This amount will increase on March 31, 2010.
6. Credit Counseling. You must complete a credit counseling session within 180 days of filing. This typically consists of a 30 minute phone call.
7. Tax Returns. You must be current on your income tax filings. Chapter 13 laws require that you submit proof that you filed your federal and state tax returns for the four tax years prior to your bankruptcy filing date. If you don’t have all of these tax returns at the time you file the bankruptcy petition, you may get a short extension.
If you’re drowning in debt and live on Long Island, consult a Long Island Chapter 13 Bankruptcy Attorney  to discuss whether Chapter 13 bankruptcy might work for you.