Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

What Is an ‘Individual With a Regular Income’ in Chapter 13?

People who are interested in filing chapter 13 New York bankruptcy will obviously want to know if they meet all the chapter’s requirements, which are stricter than chapter 7’s. For example, it has debt limits, above which debtors must file in chapter 7 or chapter 11, but Section 109(e) also restricts chapter 13 to “individuals with a regular income,” which came up recently but deserves more scrutiny. What does this mean?

The definitions section of the Bankruptcy Code, Section 101(30), defines such an individual as, “individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13 of this title, other than a stockbroker or a commodity broker.” Apparently there are some occupations that the Bankruptcy Code isn’t interested in extending chapter 13 plans to. Like many definitions, though, the one for “individual with a regular income” is quite broad. Here are some examples of what the law has in mind.

(1)  Workers with wage or salary income are pretty much the people chapter 13 was designed for. (Older versions of the law called it a “wage-earner’s plan.”) It’s easy for such debtors to show the bankruptcy court that they can make the monthly payments on the repayment plan by submitting their pay stubs. Workers can also have an easier time demonstrating that they can complete the repayment plan based on their job security.

(2)  People who run their business, whether general partners, unincorporated businesspeople, or contract workers, can also show that their income is regular. This sometimes requires certification of the debtor’s income information by an accountant.

(3)  It’s also possible for married couples (or business partners) to file jointly. In that case, the income of one can be claimed by the other as a regular income. You can read more about married couples in bankruptcy here.

(4)  Similarly, income received by family members can be claimed as regular income for the purposes of filing chapter 13. For married couples, this can allow one spouse to stay out of the bankruptcy and only join it if necessary.

(5)  Passive income sources are acceptable too, such as Social Security payments, disability payments, worker’s compensation, welfare, pensions, retirement plans, spousal support, and even investment income.

(6)  One example of what won’t work is trying to claim that asset sales are regular income, which is essentially trying to call a chapter 7 bankruptcy into a chapter 13.

Debtors usually don’t have difficulty meeting the chapter 13 “individual with a regular income” requirement. Setting up a successful repayment plan, though, requires an experienced New York bankruptcy lawyer.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 13 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

Recent Posts

Beware Grace Periods, Debtors

Too often, debtors see grace periods offered by lenders as free benefits. “Grace” makes it sound so innocent. However, debtors who routinely rely on grace periods when making payments will find themselves facing financial difficulties that might lead to bankruptcy. The reason is that although creditors offer grace periods to debtors, they also use them

Read More »

Bankruptcy May Not Rescue You From Vicious Personal Disputes

Bankruptcy is a technical process that assumes everyone working within it is mostly rational. To the extent that it expects parties to deviate from irrational behavior, the Bankruptcy Code and its accompanying rules include incentives to keep parties in line. Creditors are usually large and impersonal, and they rarely care if their debtors file bankruptcy.

Read More »

Non-Lawyers’ Explanations of Bankruptcy May Be Wrong

Do you have financial problems? Do you tend to ask your friends for advice? Is one of your friends an experienced New York bankruptcy lawyer who will explain the process for you? Are your friends otherwise knowledgeable people? The answer to these questions may be, “Yes but you don’t know it.” Although many bankruptcy lawyers

Read More »

6 Steps to Take Before Filing Bankruptcy

Leaving your case to an experienced New York bankruptcy lawyer is not the only step on the to-do list before filing bankruptcy. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result.

Read More »

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »
Scroll to Top