Eligibility Criteria for Chapter 13 Bankruptcy in Indiana

Navigating the financial waters of life can sometimes lead us to challenging crossroads. While facing such moments, it’s crucial to remember that you’re not alone, and there are structured paths designed to help you regain your footing. Chapter 13 bankruptcy, often referred to as the “wage earner’s plan,” offers one such path. At Brock Legal LLC, we often guide our clients through this process, ensuring they are equipped with the necessary information. This article aims to shed light on the eligibility criteria for Chapter 13 bankruptcy in Indiana, ensuring you clearly understand your options.

Chapter 13 Bankruptcy in Indiana: An Overview

Chapter 13 bankruptcy allows individuals with a regular income to propose a plan to repay all or part of their debts over a period. Unlike Chapter 7 bankruptcy, where assets might be liquidated to pay off creditors, Chapter 13 allows debtors to retain their assets and make structured payments. This form of bankruptcy is especially valuable for those looking to prevent foreclosures or repossessions, offering them a chance to catch up on missed payments.

Eligibility Criteria for Chapter 13 Bankruptcy: What You Need to Know

To be eligible for Chapter 13 bankruptcy, certain technical criteria must be met:

• Steady Income: You must have a consistent source of income. This holds true whether you’re self-employed or running an unincorporated business.
• Individual or Joint Filers: Eligibility is limited to individuals or married couples filing jointly, not to businesses or partnerships.
• Unsecured Debt Ceiling: Your unsecured debts must be below $465,275, though this limit is adjustable in accordance with 11 U.S.C. § 109(e).
• Secured Debt Ceiling: Your secured debts must not exceed $1,395,875, a figure also subject to adjustments as per 11 U.S.C. § 109(e).
• No Recent Bankruptcy Dismissals: There should be no dismissals of previous bankruptcy petitions within the last 180 days due to noncompliance or absence in court, or voluntary dismissals following creditor motions to lift an automatic stay.
• Credit Counseling Completion: You must have finished credit counseling with an approved agency.

Is Chapter 13 Bankruptcy Right for Me?

Filing for Chapter 13 bankruptcy might be a viable option if you:

1. Own property or have a permanent residence in the United States.
2. Haven’t declared bankruptcy under Chapter 7 in the past four years or Chapter 13 in the last two years.
3. Meet the aforementioned eligibility criteria.

Filing for Chapter 13 may be advisable if you:

1. Have steady income but find yourself getting deeper into debt.
2. Own non-exempt assets that you wish to keep, such as high real estate equity, vehicles, or other monetary assets.
3. Are behind on vehicle payments and want to avoid repossession.
4. Are at risk of losing your home due to foreclosure or eviction.
5. Need to prevent utility disconnections.
6. Are faced with lawsuits, wage garnishments, or bank freezes.
7. Have student loans that are causing significant financial hardships.

Chapter 13 might not be the best route if:

1. You doubt your ability to adhere to a repayment plan.
2. You expect your income to increase significantly within the next three to five years.
3. You qualify for Chapter 7 bankruptcy, and you own relatively few non-exempt assets.

Cost of Filing for Chapter 13 Bankruptcy in Indiana

The costs associated with Chapter 13 bankruptcy vary depending on personal circumstances and whether you hire an attorney. Court-mandated fees include:

1. The filing fee.
2. An administrative fee.
3. A trustee surcharge.

These fees are in the ballpark of $300 and may be periodically updated. They are comparable to those for filing Chapter 7 bankruptcy.

The attorney fee to file a Chapter 13 bankruptcy can range between $3,000 to $6,000, based upon the complexity of the debtor’s situation, as well as the total timeframe to complete the bankruptcy. This fee can typically be paid up front, or as part of the monthly Chapter 13 repayment plan, depending on the preference of the debtor and the attorney.

Moreover, the repayment plan represents a cost, with payment amounts determined by your income, total debt, and the nature of your obligations.

The Value of Legal Guidance in Central Indiana’s Bankruptcy Terrain

Navigating Chapter 13 bankruptcy eligibility might seem like a direct path on the surface, yet it holds its own share of unique twists and turns tailored to each individual’s situation. Treading this path without assistance can be overwhelming. That’s where a dedicated bankruptcy lawyer from Central Indiana steps in, offering a steady hand through the intricate landscape of requirements, making your journey less daunting.

Opting for Brock Legal LLC is about collaborating with more than just legal professionals; it’s about joining forces with financial navigators. Beyond mere law interpretation, our team offers authentic guidance, remains steadfastly by your side, and equips you with the insights needed to navigate Indiana’s bankruptcy intricacies confidently.

FAQs on Eligibility Criteria for Chapter 13 Bankruptcy in Indiana

What are the key eligibility requirements for filing Chapter 13 bankruptcy in Indiana?

You must have a regular source of income, whether from employment, self-employment, or an unincorporated business. You should be an individual or a joint filer with your spouse, not a business entity. Your unsecured debts must be under $465,275, and secured debts should not exceed $1,395,875. Additionally, you should not have had a bankruptcy petition dismissed in the last 180 days for noncompliance and must have completed credit counseling.

Can I file for Chapter 13 bankruptcy in Indiana if I own a business?

If you own a business, you can file for Chapter 13 bankruptcy as an individual or jointly with your spouse, provided the debt limits are within the set boundaries and the business is not incorporated.

Is Chapter 13 bankruptcy the right choice for me if I’m at risk of losing my home or car?

Yes, Chapter 13 bankruptcy can be a suitable option if you are behind on mortgage or vehicle payments and wish to prevent foreclosure or repossession by catching up on overdue payments through a repayment plan.

How often can I file for Chapter 13 bankruptcy in Indiana?

There is no absolute limit on the number of times you can file, but you need to wait at least two years from your last Chapter 13 filing. However, strategic considerations about the timing should be discussed with an attorney like Zach Brock.

What are the costs involved in filing for Chapter 13 bankruptcy?

Costs include court-mandated fees around $300, which cover the filing fee, administrative fee, and trustee surcharge. Attorney fees vary and can range from $1,000 to over $5,000, depending on various factors such as the complexity of your case. You will also need to account for the repayment plan itself.

What happens if I can’t adhere to the Chapter 13 repayment plan?

If you fail to follow the repayment plan, you may face potential risks such as the loss of assets and the ability for creditors to resume collection actions against you. Therefore, it’s essential to consider your ability to commit to the plan before filing.

Can filing for Chapter 13 bankruptcy in Indiana affect my student loans?

While student loans are generally non-dischargeable, Chapter 13 bankruptcy can sometimes help manage student loan payments. In rare cases, if you can prove undue hardship, you may be able to discharge student loan debt.

Why should I consult with an attorney before filing for Chapter 13 bankruptcy?

Attorney Zach Brock can provide expert guidance on whether Chapter 13 bankruptcy is the best option for your financial situation, help you understand the complexities of the process, and increase the likelihood of a successful outcome.