While there's no set income limit to file a Chapter 13 bankruptcy, there is a limit to how much debt you can have. In order to file a Chapter 13, you can’t have more than $394,725 in unsecured debt, and no more than $1,184,200 in secured debt.
Qualifying for a Chapter 13 Bankruptcy
Because there’s no income limit, anyone who's willing and able to pay down debt can file for a Chapter 13 bankruptcy. It doesn’t matter where your income comes from, it could be a pension, Social Security, or unemployment. As long as you disclose your income sources and submit it to the court within 14 days of filing for bankruptcy, you shouldn’t have any issues.
You also need to show proof that you filed your state and federal taxes for the past four years. If you didn’t, or you can’t prove it, your case can be delayed or even dismissed.
How a Chapter 13 Bankruptcy Works
Sometimes referred to as the Wage Earner’s Bankruptcy, a Chapter 13 bankruptcy is ideal if you have a good income, but are having trouble paying your creditors immediately.
A Chapter 13 bankruptcy is a reorganization bankruptcy that lasts three or five years, and gives you a chance to pay back your creditors over an extended period of time. You also get to keep your assets, such as a house or car, during a Chapter 13.
When you’re ready to file for a Chapter 13, you need to first get credit counseling from an approved agency. Once complete, you can file for bankruptcy where you and your court-appointed trustee come up with a repayment plan that helps wipe out your debts. The length of time you need to complete the bankruptcy depends on your income.
You have either three or five years to complete a Chapter 13, and you don’t get to choose which term. How long you’re required to spend in a Chapter 13 depends on how much you owe compared to your income, which is factored against the median income of your state. When your repayment plan is complete, the bankruptcy is discharged and any remaining debts are wiped out.
Getting a Car Loan During a Chapter 13 Bankruptcy
Because a Chapter 13 takes years to complete, did you know that you may be able to get an auto loan while the bankruptcy is open? It’s true, but you need to get approval from the court to do so.
There are a number of steps you need to take in order to get a car loan with an open Chapter 13, and you should read up on it before you decide to apply.
Need Help Finding a Dealership to Work With?
No matter if you’re going through an open Chapter 13 or the bankruptcy’s been discharged, Auto Credit Express wants to help you find a dealership that can work with you.
For 20 years, we’ve helped consumers get financed by connecting them to local dealerships that are equipped to handle bad credit, no credit, and even bankruptcy. Getting started is easy, just fill out our auto loan request form, and we’ll get searching for a dealer near you that can help you out.