Filing Chapter 13 Bankruptcy
To qualify, filing Chapter 13 bankruptcy requires debtors satisfy income qualification
According to 11 U.S.C. Section 109(a), US citizenship is not required to file Chapter 13. A residence or property ownership satisfies the jurisdictional requirement. To further qualify for chapter 13 bankruptcy, individual debtors are required to maintain regular income and owe an amount equal to or below $269,250 in non-contingent, liquidated unsecured debts and an amount equal to or below $807,950 in secured debts. Additional requirements for debtors to qualify for chapter 13 bankruptcy:
- All assets and debts must be reported to the Court.
- Debtors must appear at the Meeting of the Creditors and answer all valid questions asked by the Trustee, Creditors, and Parties in Interest.
- Creditors are allowed to questions while debtors remain under oath. Responses are admissible in subsequent Court proceedings.
- The Court conducts a hearing to verify legal compliance. The Trustee, Creditors, or a Party in Interest may object.
After filing Chapter 13 bankruptcy, debtors must then make regular payments to the Trustee, who in turn, distributes funds to creditors. If payments are not made, Trustees normally file a motion to dismiss. Payments are required even before confirmation.
Filing Chapter 13 Bankruptcy and Converting to Chapter 7
A case filed under Chapter 13 bankruptcy may be converted to Chapter 7 at any time. This right is not absolute, and the Court retains discretion to approve conversions. In practice, if Chapter 13 bankruptcy payments become past due, many debtors file motions for conversion to avoid dismissal.