Chapter 13 - Bankruptcy

Before a debtor files for chapter 13 bankruptcy, debtor should know about all the laws that cause it and many more things those are involved in this bankruptcy file. One of the most important things a debtor needs to concentrate about is, he should be having standard of income, no matter it is daily, weekly or annually. There is some eligibility that a person has to follow to apply for this bankruptcy file. A debtor has to keep one thing in mind that he has to make a plan for repayment under any circumstances. By doing this effort, the creditors come to know about the intention of the debtor to repay his debts and he has some opportunities to repair his credit score. A debtor who files for chapter 13 bankruptcy can apply for a fresh loan after 6 months of repaying the old credit whereas this has not been the case in other bankruptcy cases.

But any debtor who applies for chapter 13 bankruptcy needs to qualify for that.

Means test: The debtor should have a steady income and he should be in a capable position to repay certain amount of debts. If his income is more than the median income, he can be eligible for chapter 13 bankruptcy.
Income proof: The debtor needs to submit recent tax return file approved by the federal government.
State Exemption: The debtor must be a resident of that particular state for 2 years.
Credit Counseling: The debtor has to go for credit counseling session within 6 month prior to the date of applying for it.

After qualifying for the chapter 13, a debtor should make a plan of re-payment and show it to the federal law court appointed trustee.. After making a plan if the debtor fails to pay the repayment due to job termination, the court will again give a chance to remake a plan. There is a possibility to convert him to chapter 7, if he fails to keep the 2nd time payment plan.

To the extent possible, a debtor must try to work hard to avoid the bankruptcy. A debtor should have an idea about filing a bankruptcy should be the last option to go for.