Do You Qualify for Chapter 13 Debt Consolidation?

Posted on Feb 22, 2017 By Nick Gajewski

Lawyer Nick GajewskiThis is one of the most common questions I’m asked.  Debt consolidation (or Chapter 13 Bankruptcy as it is technically known) is one of the most common types of bankruptcy cases, and many people are familiar with how it works.  We have written before about many of the details of Chapter 13 Debt Consolidation, but today I wanted to address the issue of how to qualify for a Chapter 13 case.

How to Quality for Chapter 13

At first the answer seems simple.  Almost anyone can qualify to file a Chapter 13 Debt Consolidation.  But whether or not that case will actually get off the ground and be successful is another story.  At a certain point, qualifying for Chapter 13 Debt Consolidation comes down to arithmetic.  The portion of the Bankruptcy Code governing how Chapter 13 works lays down rules for how to calculate the amount of debt that must be repaid through the Chapter 13 Plan.  Some debts, like recent taxes or child support arears, must be fully repaid.  Others, like debts for vehicles that you want to keep or what you are behind on your mortgage, must also be fully repaid, but not necessarily with the full interest rate.  Sometimes we can greatly reduce your payments. General unsecured debts, like credit cards and payday loans, aren’t always entitled to be repaid in full in a Chapter 13 case, and your specific circumstances will determine how much of the debt must be paid.

Calculate Monthly Payments

As I mentioned, this all comes down to arithmetic.  Once we know the type and amount of debts you have, we will calculate what your monthly Plan payments need to be.  If you can afford to make those payments each month to the trustee, then you’ll qualify to go forward with the Chapter 13.  If you can’t, then one of the other chapters of bankruptcy may be right for you, but the Court wouldn’t allow a Chapter 13 case to proceed without payments.

Of course, the specifics of how payments are calculated is much more detailed than what I’ve discussed here.  Thus, we always recommend speaking with a qualified bankruptcy attorney before trying to file a case yourself.  At Bond & Botes, our experienced attorneys have handled thousands of bankruptcy cases.  We offer free initial consultations at each of our convenient locations in Alabama, Mississippi, and Tennessee.  If you have been juggling lots of different debts and you’re interested in finding out if a Chapter 13 bankruptcy case could help you, please don’t hesitate to give us a call.