Chapter 13 Bankruptcy: Pre-Filing Requirements

Though every state has some differences when it comes to bankruptcy regulations, federal guidelines control the Bankruptcy code and are set up to ensure that people don’t file for bankruptcy as a first resort in order to absolve themselves from the responsibility of their financial obligations. Most of these common laws are set up as requirements the individual must meet in order to have a bankruptcy filing recognized, and are federally mandated by the Bankruptcy Abuse Prevention and Consumer Protection Act. This act was designed in order to protect lenders from borrowers who immediately file bankruptcy after not making required payments, and to protect consumers from loans that might be considered predatory. As such, it sets bankruptcy requirements pre-filing.

Debt Requirements 

In order to be eligible for a chapter 13 bankruptcy filing, the debtor may not have a certain amount of any kind of debt.

• If the debtor’s unsecured debt totals an amount greater than $360,000 or the total amount of secured debt owed by the debtor is greater than $1,000,000 there is only a small grace amount over these two that will allow for a chapter 13 filing before the debtor will be deemed ineligible.
• These totals are adjusted from time to time in order to correctly reflect the national consumer index for pricing, but are typically greater than or equal to the amounts above.  

In order to be considered eligible for a chapter 13 filing, a debtor must also be able to prove that the amount of debt the individual has incurred is either greater than the income earned or received by the debtor, or that his income is insufficient to be able to cover all of the payments on the debts while maintaining the household needs of day to day living. The debtor must also be able to show that the reason for this is because of a change in income or circumstance leading to hardship, in order to prove to the court that the individual isn’t filing simply to be absolved from a debt. 

Mandated Credit Counseling 

The law also requires anyone who files for chapter 13 bankruptcy to be able to show, at the time of filing, a certificate of completion which has been acknowledged by a state approved credit counseling organization within 180 days before the filing has taken place. The state the debtor lives in should have a listing of the approved credit counselors the individual may consult with, and only the organizations on this listing will be recognized, as they are the only organizations that have been accredited by the government. This credit counseling session is also an attempt to alleviate the need for an individual to file for bankruptcy, and is often more successful than people are led to believe.

Getting Help

If you are facing bankruptcy, you should consult with an experienced bankruptcy attorney. Your lawyer can help you to understand the bankruptcy requirements and can assist you in filing.