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Do you have enough income to file Chapter 13?

On Behalf of | Apr 9, 2020 | Bankruptcy, Chapter 13 | 0 comments

Chapter 13 bankruptcy is one option you have as a consumer. This type of bankruptcy requires creating a plan to repay your creditors. You will pay your creditors based on the priority level of the debt. You may not repay all debts in full, but as long as you follow your plan, the court will dismiss any qualifying debts at the conclusion of your case. 

NerdWallet explains that to be able to follow through with your Chapter 13 bankruptcy plan, you must have a regular source of income. The other name for Chapter 13 is the wage earners plan because of this requirement. 

Enough money to file 

There is no set amount of money you must earn, but you need to earn enough to make your plan work. If you do not have any disposable income left after you pay your bills, then this is not likely going to work for you. You need to have disposable income to pay the creditors because that is the main point of a Chapter 13 bankruptcy. 

Priority debts 

The court will prioritize your debts once you file Chapter 13 according to the legal requirements for paying them off because there are certain debts you must pay in full before your bankruptcy discharge. Since there is a limit to how long your plan may last, which is three to five years, you must be able to pay these priority debts in full before you reach the plan time limit. If you do not have enough income to do this, then filing this type of bankruptcy may not work for you.