Who is Eligible to File for Chapter 13 Bankruptcy in Kansas City?

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In today’s economic climate, many individuals and couples find themselves facing overwhelming debt burdens. For those in such circumstances, understanding whether they are eligible to file for Chapter 13 bankruptcy can provide a path towards financial relief and stability. This guide aims to simplify the process, focusing on the qualifications and eligibility criteria necessary for individuals to file for Chapter 13 bankruptcy.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, often referred to as a “wage earner’s plan,” is a form of bankruptcy that allows individuals with regular income to develop a plan to repay all or part of their debts. Unlike Chapter 7 bankruptcy, which involves liquidating assets to pay creditors, Chapter 13 allows debtors to retain their property and develop a structured repayment plan over three to five years.

Eligibility for Chapter 13 Relief

Any individual or married couple, even if self-employed or operating in an unincorporated business, is eligible to file for Chapter 13 bankruptcy as long as their combined total secured and unsecured debts are less than $2,750,000 at the time of filing for bankruptcy relief. This threshold makes Chapter 13 bankruptcy accessible to most individuals facing financial difficulties.

Understanding Qualification as a Chapter 13 Debtor

The primary qualification for becoming a Chapter 13 debtor is meeting the debt threshold mentioned earlier. Additionally, debtors must have a regular income and be able to demonstrate their ability to adhere to the repayment plan proposed in their bankruptcy petition. This means having enough disposable income to meet the monthly payments outlined in the plan.

Benefits of Chapter 13 Bankruptcy

One of the key benefits of filing for Chapter 13 bankruptcy is the opportunity to stop foreclosure proceedings and potentially save your home from repossession. Through the repayment plan, debtors can catch up on missed mortgage payments over time, allowing them to keep their homes while regaining financial stability.

Furthermore, Chapter 13 bankruptcy offers a structured approach to debt repayment, allowing debtors to consolidate their debts into a single monthly payment. This can simplify the repayment process and make it more manageable for individuals with multiple creditors.

The Chapter 13 Bankruptcy Process

The process of filing for Chapter 13 bankruptcy typically begins with credit counseling and the completion of mandatory financial education courses. Once these prerequisites are met, the debtor can file a petition with the bankruptcy court, along with a proposed repayment plan.

Upon filing, an automatic stay goes into effect, halting all collection actions by creditors, including foreclosure proceedings, wage garnishments, and creditor harassment. The bankruptcy court will then review the proposed repayment plan and schedule a confirmation hearing where creditors can voice any objections.

If the court approves the repayment plan, the debtor will make regular payments to a court-appointed trustee, who will distribute the funds to creditors according to the terms of the plan. Upon successful completion of the repayment plan, remaining eligible debts may be discharged, providing a fresh start for the debtor.

Conclusion

Understanding your eligibility to file for Chapter 13 bankruptcy is crucial if you’re facing financial hardship and seeking relief from overwhelming debt. By meeting the qualifications outlined in this guide, you can take the first step towards regaining control of your finances and securing a brighter financial future.

If you would like more information, contact us at 913-422-0909 or visit our website www.kansascitybankruptcy.com. At W M LAW, we are “Here to Help”.

Author picture
Author picture

Jeffrey L. Wagoner

President

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