There is a specific debt threshold for filing Chapter 13 apart from the regular income criteria. The debt of the filer has to be under the threshold in order to qualify for Chapter 13. Additionally, he/she has to possess sufficient income in order to sponsor his/her future payment plan. This is only possible if there is a considerable amount of disposable income, which is the net of income and some basic expenditures. To know more amazing stuff about bankruptcy and eligibility criterions, log on to Recovery Law Group now. If you just compared your debts with the Chapter 13 debt threshold, if the outcome was a non-qualification, you need not be disappointed as there are some strategies or tips to still qualify for Chapter 13.
What is the debt threshold limit as of now?
The recent data as per April 2019 caps secured debts as well as liens to $1,257,850. The unsecured debts have been capped up to $419,275. If your current secured and unsecured debts fall below the threshold, there are no concerns. In this case, you are eligible for Chapter 13, until and unless you hold a consistent source of income. However, if your debts exceed any one of the threshold caps, you may want to consider some smart tricks to try and qualify for Chapter 13 bankruptcy.
Strategies for qualifying to Chapter 13
- Reassessing total debts
The first option to try for qualifying for Chapter 13 would be to verify if all the debts need to be matched up to the threshold or not. For instance, some debts like contingent debts which creates a liability only when a particular situation occurs, or a scenario are developed is not accounted for when verifying for the debt thresholds for eligibility. If you have included contingent debt in your total secured or unsecured debt, you can just exclude the same for determining eligibility.
Similarly, the ‘unliquidated debts’ are also not usually included in the tally of secured or unsecured debts. Unliquidated debts are debts which cannot be realized to the exact dollar. This can be a lawsuit or an injury or an accident claim. Such debts can also be ignored when determining total secured/unsecured debts for qualification purposes. Another important point to note is that these debts still need to be disclosed while filing bankruptcy and the lender/beneficiary details shall be provided with other lenders or creditors.
- Lien stripping
A single type of debt can be categorized into secured and unsecured debt based on the value of lien or the fair market value of the asset attached. The whole process is termed as lien stripping. This is very useful if your secured debt portion is exceeding the threshold but there is a significant gap between the actual unsecured debts and the cap. This will increase your unsecured debts to reduce your secured debts if that is what you want to qualify.
- Separate bankruptcy filings
Married people need not opt for the same chapters when applying for bankruptcy. If one person qualifies for Chapter 13 and the two together don’t, one of the spouses can opt for Chapter 7 bankruptcy based on what turns out to be beneficial. This is especially extremely beneficial if one of the spouses has a larger amount of unsecured loans that could be released almost completely under Chapter 7 bankruptcy code. This procedure is not an easy one and can be extremely tricky. Getting hands-on with an experienced attorney is a must for such kind of strategies. It could be just a phone call away at 888-297-6203.
- Bankruptcy court’s discretion
Sometimes, the bankruptcy court can modify the thresholds of the debt limit. This is quite rare but can happen none the less. This is commonly seen when in case of a couple where both spouses individually qualify for Chapter 13, the court may allow the proceedings to go further a single case. An experienced attorney in your city may be Dallas, California, or Los Angeles should be able to guide you with some tips to get a discretionary benefit.
How about considering Chapter 20 as an alternative?
After evaluating all these potential fixes or tips, if you still aren’t able to qualify for Chapter 13 bankruptcy Dallas, Chapter 20 might not be a bad idea either. Chapter 20 is a combo of Chapter 7 and Chapter 13. Probably a total of 13 and 7 too. Firstly, you let go all your unsecured debts by filing for Chapter 7 and then repay the remaining debt after partial asset sale or liquidation in the Chapter 13 way. You can decide to keep the assets you want and liquidate the assets to set off some of the secured debts and also avail a partial discharge of the unsecured debts too. However, the remaining debts secured and unsecured will need to be paid in full over Chapter 13 payment plan for the next 3-5 years. Since you would have already availed a partial discharge or release of debt under Chapter 7, you would not be eligible to take one more through Chapter 13.
This can certainly get tricky but with sorted and experienced attorney guidance can always make such complicated cases a lot easier. Do not forget to log on to the website or dial in to resolve your bankruptcy problems in the smoothest way possible.