Eligibility Requirements for Chapter 13 Bankruptcy
When an individual decides to file for bankruptcy, he or she has two choices: Chapter 7 or Chapter 13 bankruptcy. Although Chapter 13 does not discharge your debts – the process reorganizes debts into a one monthly payment – Chapter 13 stops the foreclosure process and allows filers to reschedule secured debts.
Under Chapter 13 protection, creditors are not allowed to directly contact you. You make payments to a trustee who then distributes the funds to creditors. Within three to five years, your debts will be resolved and you can make a fresh start.
You are eligible for an Orange County Chapter 13 bankruptcy if:
- You are an individual
- Your unsecured debts are less than $360,475
- Your secured debts are less than $1,081,400
- You have not had a bankruptcy case dismissed 180 days prior to filing
- You have received credit counseling from an approved agency within 180 days prior to filing
- Your income is higher than the median income. As of November 1, 2012, the California median incomes are:
- Household Size 1 – $47,433 Annually, $3952 Monthly
- Household Size 2 – $61,752 Annually, $5146 Monthly
- Household Size 3 – $66,034 Annually, $5503 Monthly
- Household Size 4 – $74,122 Annually, $6177 Monthly
In basic terms, Chapter 13 is for those who have a regular source of income and have enough disposable income to apply towards a repayment plan. It is a good option for those who make more than the median income, have secured assets and have more equity in the secured assets than they can protect with exemptions. When considering bankruptcy, contact a experienced law firm in Orange County for help and guidance.