How to Qualify for Chapter 13 Bankruptcy in Tennessee

Qualifying for Chapter 13 bankruptcy in Tennessee involves several specific criteria that individuals must meet to successfully file for this form of debt relief. Understanding these requirements is crucial for anyone considering this option for managing overwhelming debt.

Firstly, to qualify for Chapter 13 bankruptcy, you must be an individual or a sole proprietorship. Corporations and partnerships do not qualify for this type of bankruptcy, as Chapter 13 is designed primarily for wage earners who need to reorganize their debts.

Secondly, there are strict debt limits that applicants must adhere to. As of 2023, your unsecured debts (like credit cards and medical bills) must be less than $465,275, and your secured debts (such as mortgages and car loans) must be less than $1,395,875. These limits are adjusted periodically, so it’s essential to check for the most current figures before proceeding.

Another key requirement is that you must demonstrate regular income. This income can come from various sources, including wages, business income, or even Social Security. You must prove that you have the financial means to adhere to a repayment plan, which usually lasts three to five years.

Additionally, you must have completed credit counseling with an approved agency within 180 days before filing for bankruptcy. This session will help you understand better your financial situation and explore alternatives to bankruptcy. The credit counseling certificate must be filed along with your bankruptcy petition.

Importantly, to establish eligibility for Chapter 13, you can’t have had a prior bankruptcy case dismissed within the last 180 days for failing to comply with court orders or for bad faith conduct. If your previous case was dismissed for these reasons, you will need to wait until the 180 days have elapsed before you can file again.

It’s also crucial that you remain current on your tax obligations. The IRS requires that all overdue tax returns are filed before you file for bankruptcy. If you owe back taxes, they will be addressed in your repayment plan under Chapter 13.

Once you determine that you qualify for Chapter 13 bankruptcy under these guidelines, filing involves completing various forms detailing your debts, income, expenses, and a proposed repayment plan. This plan outlines how you intend to pay back your creditors over the term of your bankruptcy.

Finally, seeking advice from a bankruptcy attorney who is knowledgeable about Tennessee bankruptcy law is highly recommended. They can guide you through the process, ensuring you meet all necessary requirements and potentially increasing your chances of successfully completing your repayment plan.

In summary, qualifying for Chapter 13 bankruptcy in Tennessee requires meeting specific criteria regarding your identity, income, debt limits, credit counseling, and legal standing. Understanding these factors is essential for anyone looking to regain their financial footing through bankruptcy.