In 2017, a man incarcerated in another state tried to utilize Chapter 13 bankruptcy in order to keep his property and receive debt relief, but the court ultimately denied his request.
Can incarcerated individuals in Tennessee or elsewhere file for and achieve Chapter 13 approval? They can certainly file, but when it comes to receiving approval, that will most likely not happen, and here is why.
Chapter 13 and the income requirement
In order to receive approval on a Chapter 13 petition, having sufficient income to make payments to creditors is a must. In the case of the incarcerated individual whose petition did not receive approval, he did not make enough in prison to satisfy the amount needed to pay his creditors. This individual's parents did offer to step up and make the payments for him, but, ultimately, the judge decided that since he, himself, could not make the payments, he did not qualify for a Chapter 13 bankruptcy.
The reason this individual wanted the Chapter 13 bankruptcy was for the benefit of keeping his property. Unfortunately, because he lacks sufficient income, the only bankruptcy option available to him is Chapter 7. This is known as a liquidation bankruptcy, meaning one collects and sells property in order to pay off creditors. Some property may be exempt from liquidation, so it may be worth considering if Chapter 13 is simply not an option. Aside from bankruptcy, other debt relief options during incarceration would be:
- Seeking loan modifications
- Asking creditors to settle debts for lower amounts
- Asking friends and family for loans to pay the debts
Unfortunately, options are somewhat limited when you are living behind bars.
All hope not lost
If you've found yourself living in prison and have debts that you need taken care of, all hope is not lost. While a Chapter 13 bankruptcy is not likely a viable option for you, there may be other debt relief methods open and available to you that would fit your needs. An experienced bankruptcy attorney has the ability to review the specific details of your debt situation, offer guidance on the matter and can help you pursue relief in a manner that fits your needs.