How To Qualify for Chapter 13 Bankruptcy in Phoenix

Chapter 7 and chapter 13 bankruptcy in Phoenix have different filing requirements. A chapter 13 may be a good option for some debtors with non-exempt property or property they may otherwise lose in chapter 7. A chapter 13 bankruptcy in Phoenix may allow the debtor to retain all their property and repay only a portion of their debt over a three to five-year period.

Pursuant to chapter 13 bankruptcy code, to qualify to file a chapter 13 bankruptcy in Phoenix:

A Debtor Cannot be a Business

Business entities do not qualify for chapter 13 bankruptcy in Phoenix. Only individuals qualify under chapter 13. Corporations, LLC’s and other types of business entities may qualify under chapter 11 bankruptcy in Phoenix.

A Debtor Cannot be Barred from Filing

If a debtor discharged the debt in a Chapter 13 bankruptcy within the last two years or in a Chapter 7 bankruptcy within the last four years, the debtor is ineligible for a Chapter 13 discharge until the requisite time has elapsed.

A Debtor hasn’t had a Previous Bankruptcy Dismissed in the Past 180 Days.

A debtor cannot file for Chapter 13 or Chapter 7 if a prior bankruptcy petition was dismissed during the preceding 180 days for either of the following reasons:

  • The debtor willfully violated a court order or failed to appear before the court; or
  • The debtor requested that the court dismiss the case after a creditor asked the court to lift an automatic stay.

A Debtor Must Complete Credit Counseling Requirement

To file a chapter 13 bankruptcy in Phoenix, the debtor must complete the required credit counseling course within the 180 days prior to filing for bankruptcy. The debtor then much make sure that the certificate of completion has been filed with the court within 15 days of the filing date.

A Debtor Has Not Exceed the Debt Limit

To qualify for a chapter 13 bankruptcy in Phoenix, the debtor cannot exceed the debt limits set in the bankruptcy code. In most cases, the debtor cannot have more than $394,725 in unsecured debt and cannot exceed more than $1,184,200 in secured debt. If the debtor exceeds these limits, there still may be other bankruptcy options available to them.

A Debtor Has Filed Your Income Tax Returns

To qualify for chapter 13 bankruptcy in Phoenix, the debtor must have filed their tax returns prior to filing for chapter 13 bankruptcy or at least 7 days prior to the initial meeting with the bankruptcy trustee. The debtor must also provide a tax transcript to the chapter 13 bankruptcy trustee.

A Debtor has Submitted a Proposed Plan that Repays All Required Debts

Under Chapter 13, bankruptcy law requires the repayment of some debts in full. Debts in this category include:

  • Priority debts: Unsecured debts, such as child support, alimony or support payments, and non-dischargeable taxes.
  • Secured debts that survive the repayment plan: Secured debts, such as a mortgage or a vehicle loan, must remain current during the repayment plan.
  • Other secured debts: Secured debts, like judicial and tax liens, must be paid in full during the repayment time.

A Debtor has the Ability Repay a Certain Amount to Unsecured Creditors

Non-priority, unsecured creditors may also be entitled to repayment. Because a debtor may keep the non-exempt property under Chapter 13 bankruptcy, a debtor must repay non-priority, unsecured creditors at least the amount equal in value to their non-exempt property over the life of the repayment plan. Non-exempt property typically includes household appliances and furniture, inexpensive jewelry, and a certain amount of equity in a home or motor vehicle.

A Debtor Must Have Sufficient Income to Pay Debt

A debtor must have enough income, after deducting allowable expenses, for all debt obligations. A debtor may include income from a working spouse even if the spouse has not filed jointly for bankruptcy, wages and salary, self-employment income, Social Security benefits, and unemployment benefits. To qualify for Chapter 13, the debtor must have enough income for expenses, for mandatory payments to priority and unsecured creditors, and for payments to unsecured creditors in an amount at least equal in value to the debtor’s nonexempt property. The debtor must also pay the trustee a commission based on a percentage of all payments made in the plan.