Chapter 13 Bankruptcy—Who Can’t File?

Bankruptcy is a legal process that assists individuals and businesses in resolving outstanding debts and managing creditor payments fairly. Usually, creditors involved in bankruptcy proceedings do not receive full payment. There are limitations on the types of bankruptcy that you can file. How you file your taxes depends on whether you are an individual or a business and your income and debt.

When you are at risk of losing everything, or confused about which type of bankruptcy to file or even who can and who can’t file Chapter 13 bankruptcy or chapter 7 bankruptcy, you need the assistance of trusted bankruptcy attorneys in Portland who have the resources and expertise to help you develop a viable plan for a fresh start. Board-certified in bankruptcy law, the bankruptcy attorneys at Michael D. O’Brien & Associates, P.C. have assisted thousands of Oregon residents and businesses. These attorneys have helped in the bankruptcy filing process.

Priority is given to addressing issues arising from bankruptcies, and legal action is taken promptly when necessary. If you have any questions, please contact us or make an appointment for a case evaluation. We are available to discuss the various legal options available to you at any hour of the day or night.

 

• Understanding Your Options If You File For Bankruptcy – When faced with catastrophic debt, many individuals may find the concept of bankruptcy to be overwhelming. When you retain the services of a bankruptcy attorney, they will evaluate your situation comprehensively. With this in-depth knowledge of your debts and assets, your debt relief attorney will devise the most effective bankruptcy strategy.
• Improved Legal Representation – It is challenging to navigate the legal process of declaring bankruptcy. Fortunately, many attorneys have experience guiding clients through the system’s complexities. Whatever your particular needs, you can find an attorney to meet them. A legal professional can ensure that your bankruptcy petition is filed correctly.
• More Savings – A bankruptcy attorney can help you save money by claiming as few exemptions as possible. State statutes regarding bankruptcy exemptions vary. Nonetheless, a bankruptcy attorney can assist you in selecting the appropriate exemptions for your circumstances and keeping your exemptions as low as possible so that you can save more of your property after filing for bankruptcy.
• Improved Negotiations – A bankruptcy attorney may negotiate better terms on credit cards, mortgages, auto loans, and other debts or assist you in obtaining debt relief. We can help you evaluate your options and negotiate a payment plan with your creditors. Our goal is to eliminate anxiety and uncertainty from your life as you deal with overwhelming debt. You and your family can enjoy financial independence.
• Save your Residence – There is a growing demand for bankruptcy attorneys to assist underwater homeowners in preserving their homes. To avoid losing your home to foreclosure or selling it at a loss, you must be aware of the legal steps and take action before the situation worsens. Consequently, it is crucial to have a competent attorney who is well-versed in bankruptcy law.

In the context of U.S. bankruptcy laws, Chapter 13 refers to a proceeding in which debtors attempt to reorganize their debts with the oversight and permission of the court. Even if they are self-employed or run an unincorporated business, single people and married couples are eligible to file for Chapter 13 bankruptcy. 

Debtors must submit a plan to repay outstanding creditors within three to five years as part of the Chapter 13 reorganization process, also known as a wage earner’s plan. You must follow this plan for the debtor to be discharged from their obligations under Chapter 13. In most cases, the repayment plan is required to offer a sizable payback to creditors, at least equivalent to what they would receive under other types of bankruptcy. It must utilize one hundred percent of the debtor’s disposable income for repayment if necessary.

With a Chapter 13 bankruptcy, debtors must compile a list of all creditors along with the amount of money owed to each, a list of any property owned, information about income amounts and sources, and detailed information about monthly expenses.

A debtor then pays an agreed-upon monthly amount to an appointed, impartial bankruptcy trustee, effectively consolidating debts into one monthly amount. The trustee, in turn, distributes the money to the debtor’s creditors. Debtors have no direct contact with creditors under Chapter 13 protection.

In the preceding 180 days, if a previous bankruptcy petition was dismissed due:

• to the debtor’s failure to appear before the court or comply with orders of the court,
• The petition was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens,

Then the individual is ineligible to file for bankruptcy. This applies even if the petition was dismissed due to the debtor’s willful failure to appear before the court.

Additionally, to qualify as a debtor under Chapter 13 or any other chapter of the Bankruptcy Code, an individual must have received credit counseling from an authorized credit counseling agency either individually or in a group setting no more than 180 days before the filing of the petition. This counseling must have taken place within the preceding 180 days.

There are some circumstances where an exemption may be granted, such as when an emergency exists or when the U.S. trustee (or the bankruptcy administrator) determines that there are not enough approved agencies to provide the counseling. You may develop a debt management plan during mandatory credit counseling sessions. This plan is required to be submitted to the court.

A person is ineligible for Chapter 13 bankruptcy if their secured and unsecured obligations reach specific thresholds. For cases filed between April 1, 2022, and March 31, 2025, the debt amounts are $465,275 for unsecured debts and $1,395,875 for secured obligations.

If you stand to lose specific property (the property you established as collateral), the debt is secured if you default on your payments to the creditor. Home mortgages and auto loans are the most prevalent types of secured indebtedness. However, debt may also be secured if a creditor, such as the Internal Revenue Service, has filed a lien (claim notice) against your property.

Unsecured debt does not give the creditor the right to seize specific property. The majority of debts, including credit card obligations, medical and legal costs, past-due energy bills, and department store expenditures, are unsecured.

A company cannot file for Chapter 13 bankruptcy in its own name. When businesses require assistance consolidating their debts, they are directed towards Chapter 11 bankruptcy. Although a lone proprietor cannot file in the name of the business, both commercial and personal debts are his or her responsibility and are therefore included in the bankruptcy case. Thus, Chapter 13 can successfully aid in reorganizing a sole proprietorship.

However, even if you own a business, you can apply for Chapter 13 bankruptcy as an individual. You will include personally liable business-related obligations in your Chapter 13 bankruptcy filing. However, the business will continue to be liable for the debt.

If you have questions about your eligibility for filing bankruptcy or would just like to know if you can or can’t file for chapter 13 or chapter 7 bankruptcy. It is best to consult our trusted Oregon bankruptcy lawyer serving clients in Portland, Tigard, Beaverton, Hillsboro, Lake Oswego, Sherwood, West Linn, Oregon City, Gladstone, Milwaukie, Clackamas, and Gresham.

We help people get relief through bankruptcy and non-bankruptcy alternatives. Please contact Michael D. O’Brien & Associates, P.C. today to schedule a free initial case evaluation via our website.