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What are the requirements for Chapter 13 bankruptcy?

One of the primary advantages of Chapter 13 bankruptcy over Chapter 7 is that you don't have to liquidate any of your assets. With Chapter 13, you're given the opportunity to keep your property in exchange for committing to a repayment plan, which will last for three or five years depending what the court decides.

However, not just anyone can qualify for Chapter 13. There are specific requirements every Kentucky resident must meet before he or she will be permitted to initiate Chapter 13 proceedings.

First and foremost, you have to be a person or a husband and wife duo if you want to seek Chapter 13 protection. For example, corporate entities like an LLC have to file through Chapter 11 instead of 13. That said, sole proprietors who are liable for business debts can qualify for Chapter 13. Commodity brokers and stockbrokers, however, are not eligible.

Second, you cannot be barred from filing by a previous bankruptcy. If you discharged debt via Chapter 13 within a timeframe of two years, and if you discharged debts via Chapter 7 within a timeframe of four years, you will be ineligible until the barring time period is over. Similarly, your last bankruptcy matter cannot have been dismissed within a period of 180 days ago because you failed to show up to court, denied a court order or you asked your case to be dismissed following a creditor's request that the court lift an automatic stay.

Third, you have met your credit-counseling requirement. You need to complete credit counseling before you can qualify for bankruptcy, and you have to submit proof of completion to the bankruptcy court.

In addition to the above, your debts cannot be so high that you can't pay them off, your income needs to be sufficient to meet your payment plan requirements, you have to have filed all your tax returns and other considerations. One of the most important concerns is, even if you qualify, is Chapter 13 the most advantageous debt solution strategy for you? By speaking with a qualified bankruptcy attorney, Kentucky residents can answer this question and more.

Source: FindLaw, "Who can file for Chapter 13 bankruptcy?," accessed Feb. 05, 2016

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