There are several qualifications that need to be met in order for someone to be eligible to file a Chapter 13 case.
First, in order to be eligible to file a Chapter 13 case, there is a debt limit of $360,475 of unsecured debt and $1,081,400 of secured debt. A debtor’s total unsecured and secured debt must be less than these amounts on the date the bankruptcy petition is filed or a person cannot file a Chapter 13 case. These figures are based on Consumer Price Index increases and are adjusted every three years on the first day in April beginning with April 1, 1998. The last time prior to the publication of this book the amounts were adjusted was April 1, 2010. These dollar amounts will again be adjusted on April 1, 2013. A Utah bankruptcy lawyer can assist in determining what the current figures and numbers are when a debtor is ready to file bankruptcy.
A debtor must have some source of “regular income” in order to be able to file a Chapter 13 case. Regular income includes self-employment income, regular wages, child support, alimony, social security and disability income. Some judges even allow unemployment income and regular contributions from family members (if they are consistent and will likely continue into the foreseeable future). The debtor needs to demonstrate to the court that the debtor has sufficient income to cover basic needs like housing and food and then have enough left over to pay the monthly plan payment. The debtor’s Utah bankruptcy lawyer will assist in determining what income figures are acceptable to use. Debtors have some wiggle room in computing their budgets and many judges are inclined to give debtors a chance to try and make their plan succeed even if they do not have a lot of income and have a lean budget. There is no income limit on a Chapter 13 case. Sometimes debtors with bigger incomes are required to pay more back to creditors.
In order to receive a discharge in a current Chapter 13 case, a debtor must wait four years after receiving a discharge in a prior Chapter 7 case and two years after receiving a discharge in a prior Chapter 13 case. The tolling period is from the petition date in the old case to the petition date in the new case. A debtor may file a case even if these waiting periods have not lapsed, but the debtor will NOT get a discharge in the new case. If a debtor files a Chapter 7 and then three years later has a lot of new medical bills, a debtor may file a new Chapter 13 case but will not get a discharge in the new case. Often debtors will file a Chapter 13, knowing they are not getting a discharge, in order to stop garnishments or to put a stop to harassing creditors. The debtor’s Utah bankruptcy lawyer can readily assist in looking up old cases that the debtor may have filed.