How To Qualify For Chapter 13 To Save A Home

Qualifying for Chapter 13 bankruptcy can be a strategic move to save your home from foreclosure. Chapter 13 allows you to reorganize your debts and catch up on missed mortgage payments over time. Here’s how you can qualify for Chapter 13 bankruptcy to save your home:

1. Regular Income:

• You must have a regular source of income to qualify for Chapter 13 bankruptcy. This income can come from employment, self-employment, seasonal work, commissions, retirement benefits, social security, or even financial support from family members. The key is to have sufficient income to cover your living expenses, make monthly payments under the Chapter 13 plan, and catch up on your overdue mortgage payments.

2. Debt Limits:

• As of 2021, your unsecured debts (like credit card bills and medical expenses) must be less than $419,275, and your secured debts (like mortgages and car loans) must be less than $1,257,850. These amounts are adjusted periodically for inflation, so it’s important to check the current limits.

3. Tax Filings:

• You must be up-to-date on your tax filings. You need to have filed your federal and state income tax returns for the four tax years prior to your bankruptcy filing. If you haven’t, you’ll need to get these filed before proceeding with a Chapter 13 bankruptcy.

4. Credit Counseling:

• You must complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy. This requirement ensures that you understand all your options and the implications of bankruptcy.

5. Feasibility of the Repayment Plan:

• You’ll need to propose a repayment plan that shows how you’ll catch up on missed payments and continue to stay current on your ongoing mortgage payments. The plan must demonstrate that you can afford to make these payments in addition to your other living expenses and obligations.

6. No Recent Bankruptcy Discharges:

• If you’ve previously filed for bankruptcy, certain time restrictions apply. You can’t file for Chapter 13 if you received a discharge in a Chapter 7 bankruptcy within the last four years or in a Chapter 13 bankruptcy within the last two years.

7. Equity Security:

• Your home equity should not exceed the exemption limits. If there’s significant non-exempt equity in your home, the Chapter 13 trustee might challenge your plan, arguing that creditors would be better off if your assets were liquidated in a Chapter 7 bankruptcy.

8. Legal Assistance:

• Consider consulting with a bankruptcy attorney who can help you understand the qualification requirements, assist with the preparation of your filing, and represent you in court. An attorney can also help you develop a feasible repayment plan that meets the court’s requirements and addresses your goal of saving your home.

Qualifying for Chapter 13 bankruptcy involves meeting specific criteria related to your income, debts, tax filings, and legal history. By successfully filing for Chapter 13 and adhering to a court-approved repayment plan, you can stop foreclosure proceedings and keep your home while you catch up on missed payments. Given the complexities involved, seeking legal advice is highly recommended to navigate the process effectively.

Chapter 13 To Save A Home