In what cases will I not be able to file a Chapter 13 bankruptcy?

Chapter 13 provides individuals (referred to as debtors) a way to keep their property such as a home or car while paying creditors the money owed. Generally, chapter 13 lasts three to five years and requires debtors to make monthly payments according to a repayment plan. When everything goes smoothly, debts are eliminated and debtors permanently keep their property.

However, chapter 13 rules prohibit some individuals from filing. For instance, chapter 13 is based on meeting eligibility requirements. This means that anyone who wanting to file chapter 13 must have enough disposable income to pay creditors through their repayment plan. Therefore, when individuals pass a means test, they qualify for chapter 7, not chapter 13. In addition, people without regular income from a job, social security benefits and child support can’t file chapter 13.

Debts can also disqualify individuals from filing chapter 13. For example, anyone owing more than $1,081,400 is not eligible for chapter 13, according to Nolo.

In certain cases a business--even considered a sole professorship--can’t file chapter 13. Instead a business must file chapter 13. However, individuals who own a business may file chapter 13 to take care of personal debts and business-related debts such as--wages to employees.

To say filing bankruptcy is complicated may be considered an understatement. Thus, consulting with a bankruptcy lawyer will be an advantage. The bankruptcy lawyer will explain the process and determine if individuals are eligible for filing chapter 13.