While there are not minimum or maximum income requirements for Chapter 13 bankruptcy, there are some requirements you must meet. Chapter 13 bankruptcy, often referred to as a “wage earner’s plan,” allows individuals with a steady income to reorganize their debts and create a repayment plan. Unlike Chapter 7 bankruptcy, which involves liquidating assets to pay creditors, Chapter 13 focuses on restructuring debt while enabling the filer to retain valuable property, such as a home or car.

Requirements for Filing Chapter 13 Bankruptcy

Although Chapter 13 does not have an income requirement, your income plays a crucial role in determining your eligibility. Chapter 13 bankruptcy is only available to individuals (not businesses) with a regular income source. This income can come from various sources, including wages, salary, self-employment, and more.

To confirm your eligibility, the court assesses whether your income is sufficient to cover not only your payments, but also mandatory living expenses, payments on secured debts (like a mortgage or car loan), and a portion of your unsecured debts (such as credit card debt and medical bills). If your income is insufficient to meet these obligations, the court may deny your Chapter 13 petition.

While there are no specific income limits, Chapter 13 imposes limits on the amount of debt you can have:

• Unsecured Debt (e.g., credit cards, medical bills): Must not exceed $2,750,000.
• Secured Debt (e.g., mortgages, car loans): Must not exceed $2,750,000.

These limits are adjusted periodically for inflation.

Determining Your Repayment Plan

Your income also determines the length and structure of your repayment plan. After deducting allowable living expenses (such as housing, food, and utilities), the remaining disposable income must go toward repaying creditors.

If your income is below the state median for a household of your size, your repayment plan typically lasts 3 years. If your income is above the state median, your plan usually extends to 5 years. During this period, you must commit all disposable income to the repayment plan.

If your income fluctuates or is insufficient to cover your proposed repayment plan, alternatives may include modifying the repayment plan or considering Chapter 7 bankruptcy instead.

Tulsa Chapter 13 Bankruptcy Attorneys

While there are no specific income thresholds for filing Chapter 13 bankruptcy, a steady income is essential to meet the plan’s repayment obligations. Your income determines the feasibility of your plan and influences the length of the repayment period. By understanding the income requirements and planning accordingly, you can use Chapter 13 bankruptcy to achieve a fresh financial start.

Our team at Tulsa County Lawyers Group has years of bankruptcy experience and will walk you through the process. If you need help, contact us today by calling (918) 379-4864 or reach us online for a consultation.