What Are the Qualifications for Chapter 13 Bankruptcy?
If you are struggling with debt, you could file for bankruptcy. Depending on your situation, an experienced bankruptcy lawyer can advise you on how to go about this process.
Remember there are different types of bankruptcy, and each has its own qualifications. Learn more about the eligibility criteria for Chapter 13 bankruptcy in this guide.
You Should Have a Regular Source of Income
To qualify for Chapter 13 bankruptcy, you need a steady source of income. You should have either a job or regular payments from a pension. Other acceptable sources of income include child support, alimony, and disability payments.
If you are self-employed, you can also qualify for Chapter 13 bankruptcy as long as you have a steady income. However, you will need to provide documentation of your income, such as tax returns or bank statements.
In some cases, a spouse's income can be used to qualify for Chapter 13 bankruptcy even if they are not filing for bankruptcy themselves. This is known as involuntary income and can help the household qualify for bankruptcy.
To file for Chapter 13 bankruptcy, you will need to prove that your income is sufficient to cover your necessary expenses. You'll need to pass a means test that factors in your income, debts, and living expenses.
If you do not meet the means test requirements, you may still be able to file for Chapter 13 bankruptcy under special circumstances. For example, if you have fallen on hard times due to a medical emergency or job loss, you may still be able to qualify for bankruptcy.
Your Tax Returns Should Be Up-to-Date
A bankruptcy trustee will ask for is your most recent tax return. If you haven't filed your taxes yet, now is not the time to put it off. You need to file all of your past tax returns.
If you have made any mistakes on your original return, you may also need to amend and file the final tax returns. Once you have filed all of your past tax returns, you need to start making payments on the taxes that you owe.
If no back taxes are owed to the IRS, you could be eligible for tax refunds. You can start receiving your tax refund as soon as you file for bankruptcy. Also, you could receive a discharge after filing for Chapter 13 bankruptcy. This discharge would eliminate the liability for any taxes due before you filed for bankruptcy.
If you need more information on how to file for bankruptcy, reach out to a reputable bankruptcy lawyer for further guidance.