What Are the Eligibility Requirements for Filing Chapter 13 Bankruptcy?

Facing ongoing debt can feel overwhelming, especially when monthly obligations keep stacking up faster than income can cover them. Many people start looking for structured options that allow them to regain control while keeping important assets like their home or vehicle. 

After considering the emotional side of financial stress, it also helps to know where to turn for legal guidance. At Swindell & Associates, PC, we work with individuals and families who are exploring bankruptcy solutions in Amarillo, Texas, and the Texas Panhandle. Our firm focuses on helping clients work through the requirements of Chapter 13 bankruptcy so they can make informed decisions about their financial future with clarity and confidence.

Chapter 13 bankruptcy is a common consideration, as it emphasizes reorganization over liquidation, allowing individuals to repay debts over time. Determining if this option suits your needs requires a thorough review of the eligibility requirements and how they align with your financial situation.

The Basics of Chapter 13 Bankruptcy Eligibility

Chapter 13 bankruptcy is designed for individuals with regular income who want to reorganize their debts through a court-approved repayment plan. Unlike Chapter 7, which may involve selling certain assets, Chapter 13 allows filers to keep their property while making structured payments over three to five years. 

That focus on repayment means eligibility centers on income stability, debt limits, and personal filing status. As people explore this option, they often move naturally from asking whether bankruptcy is possible to asking whether Chapter 13 is the right chapter.

Filing as an Individual With Regular Income

One of the core eligibility requirements for Chapter 13 bankruptcy is that the filer must be an individual with regular income. This income doesn’t have to come from a traditional salary, but it does need to be predictable enough to support monthly plan payments. Regular income may include:

• Employment wages: Paychecks from full-time or part-time work that show consistency over time

• Self-employment earnings: Income from freelance work or business operations that can be reasonably projected

• Fixed payments: Social Security benefits, pensions, or disability payments that arrive on a set schedule

This requirement ties directly to the repayment structure of Chapter 13. Because the court evaluates a proposed payment plan, a dependable source of income is necessary to support it. Consequently, individuals without a stable income often explore other bankruptcy options or debt relief methods before revisiting Chapter 13.

Debt Limits Set by Federal Law

Income alone isn’t enough to qualify. Federal law also places limits on how much debt a person can carry and still file for Chapter 13 bankruptcy. These limits are adjusted periodically and apply separately to secured and unsecured debts. Debt categories include:

• Secured debts: Obligations tied to property, such as mortgages or car loans

• Unsecured debts: Balances without collateral, including credit cards and medical bills

If a person’s debts exceed these limits, Chapter 13 may not be available, and Chapter 11 could become the alternative. This shift from Chapter 13 to another option highlights that bankruptcy eligibility isn’t just about financial hardship but also about meeting specific statutory requirements.

Prior Bankruptcy Filings and Waiting Periods

Another important eligibility factor involves previous bankruptcy filings. Federal law places waiting periods between filings to prevent repeated use of bankruptcy protections within short time frames. Relevant timing issues include:

• Recent Chapter 7 discharge: A person may need to wait a certain number of years before filing Chapter 13

• Prior Chapter 13 case: Shorter waiting periods may apply depending on how the earlier case ended

These rules encourage responsible use of bankruptcy while still allowing people who’ve faced recurring financial setbacks to seek relief again when appropriate. When clients ask about eligibility after a past filing, we focus on how timing and case outcomes affect their current options.

Credit Counseling Requirements Before Filing

Before filing for Chapter 13 bankruptcy, individuals must complete a credit counseling course from an approved provider. This requirement applies to most personal bankruptcy cases and must be completed within a specific period before filing. The counseling process includes:

• Reviewing income and expenses: Looking closely at monthly cash flow

• Exploring alternatives: Discussing non-bankruptcy options that may address debt

• Receiving a certificate: Proof of completion that must be filed with the court

This step often serves as a bridge between financial distress and formal legal action. By the time someone completes counseling, they usually have a clearer picture of whether bankruptcy, and Chapter 13 specifically, fits their needs.

Ability to Propose a Feasible Repayment Plan

Eligibility doesn’t stop at meeting income and debt thresholds. To move forward with Chapter 13 bankruptcy, a filer must propose a repayment plan that the court can approve. That plan must show how debts will be paid over time while meeting legal requirements. Key elements of a feasible plan include:

• Priority debts paid in full: Obligations like certain taxes or domestic support

• Secured debts addressed: Catching up on missed payments or restructuring loan terms

• Disposable income applied: Using remaining income after necessary expenses toward the plan

This requirement ties back to regular income and realistic budgeting. If the numbers don’t support a workable plan, the court may deny confirmation, prompting a reassessment of available options.

Tax Filing and Documentation Responsibilities

Eligibility for Chapter 13 bankruptcy also depends on compliance with tax filing requirements. Filers must be current on required tax returns before the court will confirm a repayment plan. Documentation expectations include:

• Recent tax returns: Filed for the years leading up to the bankruptcy case

• Proof of income: Pay stubs or other records showing earnings

• Expense disclosures: Accurate accounting of monthly living costs

These requirements promote transparency and help the court evaluate whether the proposed plan reflects actual financial conditions. As paperwork comes together, many clients realize how closely eligibility and preparation are linked.

Good Faith Filing and Honesty With the Court

Bankruptcy law requires that Chapter 13 cases be filed in good faith. This means the filer must be honest about debts, assets, income, and expenses and must genuinely intend to complete the repayment plan. Good faith considerations may involve:

• Accurate disclosures: Listing all creditors and property

• Reasonable expenses: Avoiding inflated costs meant to reduce payments

• Consistent conduct: Showing a sincere effort to address debt rather than avoid it

This requirement flows naturally from earlier eligibility factors. When income, debt limits, and documentation align, good faith often follows as a matter of careful preparation and transparency.

Transitioning From Eligibility to Long-Term Planning

Once eligibility requirements are met, attention often shifts from whether Chapter 13 bankruptcy is allowed to how it will shape the next several years. The repayment period, budget adjustments, and ongoing court oversight all become part of daily life.

This transition underscores why eligibility isn’t just a checklist. It’s the foundation for a longer financial strategy that prioritizes stability and gradual progress. By working through each requirement carefully, individuals can approach bankruptcy with clearer expectations and a stronger sense of direction.

Discuss Chapter 13 Bankruptcy With Our Firm

If you’re considering filing for Chapter 13 bankruptcy, our firm is here to help you review eligibility and discuss practical next steps. At Swindell & Associates, PC, we work with clients in Amarillo, Texas, and throughout the Texas Panhandle, including Borger, Pampa, Hereford, and Dumas. Reach out to us today at Swindell & Associates, PC to talk through your options and take a step toward financial stability.