Both Chapter 7 and Chapter 13 bankruptcy help Lake County families get out of overwhelming debt. But for many, Chapter 13 is the preferred option. Unlike Chapter 7 bankruptcy, under Chapter 13 bankruptcy, you get to keep all your property. And a Chapter 13 bankruptcy filing stays on your credit report for three fewer years than a Chapter 7 filing.
Qualifying for Chapter 13 bankruptcy is more difficult compared with Chapter 7. But not as tough as some people think. Without realizing it, you might qualify for Chapter 13 bankruptcy protection. Here are some examples of those who can potentially qualify.
Sole proprietors and partnerships
Most business entities, including LLCs and corporations, are ineligible for Chapter 13 bankruptcy. They must file Chapter 11 instead. But small business owners who operate as sole proprietors or in partnerships can file based on debts for which they are personally liable.
People who have gone through bankruptcy before
If you have already filed for bankruptcy recently, you cannot file for Chapter 13. But this limit does not last forever. You can file for Chapter 13 now if your last Chapter 13 filing was more than two years ago and/or if you filed for Chapter 7 more than four years ago. Also, if you previously filed for Chapter 13 but the court dismissed your claim for one of several reasons, you must wait at least 180 days to file again.
People with (relatively) little debt
Chapter 13 bankruptcy is only available to those with a maximum amount of debt. For 2021, the limit for individuals is $419,275 in unsecured debt and $1,257,850 in secured debt (debts backed by property, such as a mortgage or car loan). If your debts total less than these amounts, you may be eligible.