American Financial Care for Credit Scores

Chapter 13 bankruptcy is sometimes known as the “Wage Earner Plan” in that it often allows the filer to keep many assets and ultimately pay off some of all of his or her debts.  While your credit record is still negatively affected, it does give the satisfaction of having met your obligations in whole or part.  In 2005, after concerns were raised about the rising rate of bankruptcies and suspected abuses of the system, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act.  This legislation made it more difficult to declare bankruptcy, requiring mandatory credit counseling and qualification based on income.  Unlike before the reforms, debtors can no longer choose which type of bankruptcy they wish to file – Chapter 13 or Chapter 7 – and must, instead, first meet certain criteria.

In short, here are the requirements as noted from Florence bankruptcy attorneys to qualify for a Chapter 13 filing:

•    Secured debts cannot exceed $922,975
•    Unsecured debts cannot exceed $307,675
•    Income must be sufficient to repay debts as structured by the court.
•    Must complete credit counseling and provide certificate to court along with filing package.
•    Must submit previous year’s tax return and proof taxes were paid to court.
•    Pay filing fee of $274.00
•    Chapter 13 payments must commence within 30 days after case is submitted to court.
•    Payments must be made to trustee or deducted from payroll check if income is steady.
•    If average monthly income over the last six months is higher than the state median income, a five year plan is proposed. 
•    If average monthly income over the last six months is lower than the state median income, then a 3 year plan is proposed.
•    If unavoidable circumstances prevent timely payments, then the court may adjust your plan.  In the case of extreme hardship, for instance the closing of the only production plant in a small town, the court may completely discharge your debts.
•    If the court will not modify your plan nor dismiss your debts, then you may convert to a Chapter 7 plan, or absolute bankruptcy, to discharge all your debts.
•    Chapter 13 concludes when the payment plan is completed.  All debts eligible for discharge will be discharged. Proof must be presented of successful completion of financial management training (not to be confused with the training required before the case is filed), and you are current on all child support and alimony payments.

Bankruptcy attorneys in Florence can help you further on this topic.

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