Due to the economic recession, many people in Maryland have been experiencing considerable financial challenges. While some manage to scrape through the tough times, there are a significant number of people in the state whose financial stability was hit hard. Many people resort to bankruptcy as a method of debt relief. Those who did not have a disposable income liquidated their assets in a Chapter 7 bankruptcy filing; others, who have disposable income, filed for bankruptcy under Chapter 13.
According to the guidelines of Chapter 13 of the U.S. Bankruptcy Code, an individual or a married couple can file for bankruptcy under the following conditions:
- The debtor has not been discharged of debt through a Chapter 13 filing in the last two years or through a Chapter 7 filing in the last four years.
- The debtor must have been counseled by an authorized credit counseling agency at least six months prior to filing for bankruptcy.
- The accumulated unsecured debts of the individual must not be more than $336,900. Similarly, secured debt cannot be more than $1,010,650.
- The debtor must have filed income tax returns for at least the past four years.
- The proposed repayment plan must allow the repayment of debts such as child and spousal support, taxes that cannot be discharged, home mortgage and vehicle loans and judicial and tax liens.
- The debtor must have a repayment plan, which ensures that some unsecured debts are also paid as a part of the Chapter 13 bankruptcy discharge.
However, the most important point to remember at this juncture is that a Chapter 13bankruptcy is only possible when the debtor has sufficient income to repay creditors as well as meet the day-to-day expenses. Income in this case would include wages and salary, business income, unemployment benefits and Social Security benefits.
Source: FindLaw.com, “Who Can File for Chapter 13 Bankruptcy?” accessed on Sept. 12, 2014