Can a Person Be Denied Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is different from Chapter 7 in that rather than a liquidation to pay back creditors, a plan is developed under the supervision of the court to pay back creditors over three to five years. Because this allows debtors to keep more assets, there are more stringent requirements for Chapter 13 than Chapter 7 bankruptcy.
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Considerations
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People often desire to obtain a Chapter 13 bankruptcy because they have a certain non-exempt asset, like a home, that they wish to keep.
Requirement of Income
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Chapter 13 is also known as a wage earner's bankruptcy. A person must have access to a regular stream of income from either employment or self-employment to qualify for Chapter 13 bankruptcy.
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Requirements in Amount of Debt
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As of 2009, to qualify for Chapter 13 bankruptcy an individual must have unsecured debts less than $336,900 and secured debts of less than $1,010,650. These numbers are updated to reflect inflation.
Procedural Requirements
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A person is prevented from filing for bankruptcy if during the preceding 180 days he willfully failed to appear in court or the petition was voluntarily dismissed after an attempt by creditors to recover property on their liens.
Conversion to Chapter 7
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If a debtor fails to make payments in accordance with the Chapter 13 bankruptcy plan, then the court has the power to convert the case to a Chapter 7 liquidation bankruptcy case.
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