If you’re like many people, you’re in serious financial straits and you’re not quite sure where to turn.
You may have asked yourself, “Do I qualify for Chapter 13 bankruptcy in Maryland?”
While not everyone does qualify to file for this type of debt relief, you might; the courts determine who is eligible and who is not by following a very specific formula.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often called reorganization bankruptcy, and it requires you to repay most of your debts over time. It’s different from Chapter 7 bankruptcy, which typically erases some or all of your debt so you can start over without repaying creditors.
Who Can Qualify for Chapter 13 in Maryland?
Businesses can’t file for Chapter 13 bankruptcy. That includes sole proprietorships. Instead, businesses should use Chapter 11 bankruptcy.
This type of debt relief isn’t right for everyone. If you qualify for Chapter 13, you will need to use your income to repay some or all of your debt—and you’ll have to prove to the court that you can meet your repayment obligations.
The Laws Governing Who Qualifies for Chapter 13 Bankruptcy
In Maryland and elsewhere in the U.S., Chapter 13 bankruptcy is largely governed by federal law. However, there are a few Maryland-specific circumstances that may make your case a little different. You and your Chapter 13 bankruptcy lawyer may need to file special Maryland bankruptcy forms, as well.
Income Requirements to Qualify for Chapter 13
If your secured debts exceed a certain amount of money, you won’t qualify for Chapter 13, so for the most part, it’s best to talk to a Maryland bankruptcy attorney before you move forward to file; that way, you’ll be able to make the most informed decision about what’s right for you.
You’ll need to show the court that you’ll have enough money left over to repay your debts after you subtract your allowed expenses and repayments on secured debts (like your car loan or your mortgage). In order to fund your Chapter 13 repayment plan, you can use:
Regular wages or salary, or income from self-employment
Commissions from sales or other work
Social Security benefits
Disability or workers’ compensation benefit payments
Unemployment benefits and similar payments
Child support or alimony
Proceeds from selling property
You’ll also need to be current on your income tax filings to qualify for Chapter 13. The courts require proof that you filed both federal and state income tax returns for the past four years, and if you can’t provide it, the court will dismiss your case.
Do You Need to Talk to a Lawyer About Whether You Qualify for Chapter 13 in Maryland?
You can turn to us for Chapter 13 help; you don’t have to fight this battle alone.
Call us at 301-933-2595 for your free Chapter 13 bankruptcy consultation. We’ll be happy to help you determine what type of bankruptcy is right for your situation, and at the same time, we’ll help you create a plan that gets you the fresh start you deserve.