The initial question that must be answered in any bankruptcy analysis is whether you are eligible to file a Chapter 13 bankruptcy.
You Have to Be An Individual
Only an individual can file a chapter 13 Bankruptcy. A business, corporation, limited liability company (LLC), or partnership cannot file for Chapter 13 bankruptcy. Businesses that wish to reorganize have to file Chapter 11, or those that wish to liquidate must file a Chapter 7.
You can, however, file a chapter 13 Bankruptcy if you are an individual and own a business. You should include in your Chapter 13 bankruptcy case business debts for which you can be personally liable. In addition, you cannot file an individual Chapter 13 case if you are a stockbroker or commodity broker.
Sufficient or Enough Disposable Income
You must prove in a Chapter 13 that you have enough income after allowing for regular expenses. Your plan may pay a low percentage or certain debts in full depending on your situation. Various sources can be used to fund a Chapter 13 plan, such as wages or salary, self employment income, commissions from sales, pension payments, social security payments, unemployment or workers compensation benefits, personal injury lawsuit proceeds, sales proceeds from property, child support or alimony you receive, family contributions, and proceeds from sale of other assets. In addition, our firm has found creative ways to argue successfully different types of plans and sources of funding for plans.
Your debts cannot be too high in order to be eligible for a Chapter 13 bankruptcy. Your secured debts cannot exceed $1,149,525. This amount will adjust for inflation on April 1, 2016. Examples of secured debt are mortgages, car loans and loans secured by a business. Your unsecured debts cannot exceed $383,175. This amount will adjust for inflation on April 1, 2016. Examples of unsecured debt are credit card debts, medical bills, back utility bills, and any other debt not secured by collateral.
You may be able to argue around these debt limits if the amounts owed are in dispute, contingent and not yet liquidated. An example of this type of debt is a lawsuit that the amount has not yet been determined.
Income Tax Filings Must Be Current
You have to be current with tax returns for the four tax years prior to your bankruptcy filing date. You can request an adjournment of bankruptcy court proceedings to try to become current on federal or state tax returns, but you will have to do it.
Contact our NJ Office to See if You are Eligible for Chapter 13
Please call or contact a lawyer in one of our New Jersey offices to determine if you are eligible for a Chapter 13. Our law firm provides a free analysis prior to our being retained.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.