As part of the bankruptcy process, Chapter 13 bankruptcy requires you to use your income to repay some or all of your debts and you will need to demonstrate to the bankruptcy court that you can afford to meet all of your payment obligations. This is generally determined by the bankruptcy court based on information you provide when filing your case.
Similar to a Chapter 7 bankruptcy, you must complete the “means test” to determine if your income is higher than the median income for your state. If your income is lower than the median income for your household size, you will be eligible to complete your Chapter 13 repayment in 3 years. If your income is higher than the median income for your state, you will need to commit to a 5 year repayment plan and may need to guarantee a certain amount of money to your unsecured creditors.
You must be current on your income tax filings. While you only need to provide the most recent year to the trustee, you will be asked under oath if you have filed the tax returns that you are required to file for the previous four years and if you have not filed them, your case can be dismissed. Generally, the court will give you several months to file your taxes after your case is filed but if you do not have them filed at that time, your case may be dismissed.
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