People in Virginia considering declaring bankruptcy may wonder whether they qualify for Chapter 13. They tend to ask about the income limits for filing a Chapter 13 bankruptcy as well as the required size of debt itself. What many people are surprised to learn is that there is no income limit for filing a Chapter 13, but the size of debt one can hold is limited: To qualify, one’s unsecured debt cannot exceed $394,725 whereas their secured debt must stay below $1,184,200.
Seeing as there are no income limits when it comes to qualifying for a Chapter 13 bankruptcy, the only issue is whether the debt holder is able to repay the debt and is willing to do so. The source of the income itself is of little relevance as long as it is disclosed and submitted to the court. Individuals also need to prove that they’ve filed both their state and federal taxes over the previous four years. Otherwise, they risk having their case delayed if not tossed out altogether.
It is worth understanding how a Chapter 13 bankruptcy works if someone is unable to pay their creditors on the spot despite having a solid income. In short, Chapter 13 allows people to restructure their debt to be able to pay it over three or five years while still holding onto their assets. The time period over which the debt is paid, be it three or five years, is not up to the individual carrying the debt. Instead, it is decided for them depending on the size of their debt along with how much they make in comparison to the state median income.
Filing for Chapter 13 means navigating laws that the layman may be unaware of. For instance, just because someone filed for Chapter 13 does not make them ineligible for receiving a car loan while still in bankruptcy. As a result, in order to better understand their situation and to be aware of their legal options for protecting property, people declaring bankruptcy might benefit from reaching out to an experienced attorney.