Chapter 13 Bankruptcy

Filing for Bankruptcy in Texas

If you’re unable to file for Chapter 7 bankruptcy, then Chapter 13 will probably be your next best option. With a Chapter 13 bankruptcy you’re allowed to repay all or some of your debts.

In a Chapter 13 bankruptcy, you and your lawyer will use a restructuring plan which gives you a way to repay loans using interest rates that are more acceptable as well as lowering the payments you make. In order to file for Chapter 13 you must have income coming in regularly that will allow you to make the new payments. In consultation with your bankruptcy lawyer you’ll determine the amount of income you can afford to put toward your outstanding debts.

Chapter 13 Bankruptcy – How It Works

Working with your bankruptcy lawyer you’ll come up with a restructuring plan whereby you both work toward a restructuring plan that gives you an outcome that is favorable to you. Once you and your bankruptcy lawyer have a plan finalized, your lawyer will then present it to the court for their approval. To do this, you’ll need to assess all your debts, your assets and your ongoing expenses. Chapter 13 bankruptcy works well for those who have income, but who constantly struggle to repay debts and cover their monthly expenses at the same time.

When the court accepts the plan and your bankruptcy papers are filed with the court, your payments will start in about 30 days. Normally you’ll be given 3-5 years to make payments to your creditors that will pay off your debts.

With a Chapter 13 bankruptcy you will be allowed to keep all the property you own, and your creditors will be required to follow the bankruptcy plan. They will not be allowed to try and collect on any debts that are not part of the plan approved by the court. As well, you’ll be expected to follow the plan and the court will administer the whole process. During the bankruptcy process you’ll attend meetings with the court and your creditors. When all repayments have been completed, your plan will be concluded and all your debts will be discharged.

Why Should I File for Chapter 13 Bankruptcy?

The first thing that filing for Chapter 13 bankruptcy does is stop all creditors from harassing you. They will not be allowed to garnish your wages, repossess any of your property or foreclose on your home. As soon as the paperwork is filed for this type of bankruptcy, all actions against you must stop, and creditors will be obliged to take what the court decides is appropriate, under the plan you and your lawyer have filed. The minute the papers are filed the court will issue a stay. This prevents any creditor from foreclosing on your home or taking your vehicle. It also allows a period of time for you to catch up on any car or mortgage payments.

You will need to qualify in order to file for Chapter 13 bankruptcy. You must have enough income that will allow you to make the payments and still cover your monthly expenses. Your mortgage payments must still be made but the arrears may be part of your bankruptcy plan. In some cases, automobile payments may be included in your bankruptcy.

Taxes and child support are not dischargeable, but Chapter 13 can allow you to eliminate penalties and interest while creating a viable payment plan. The payment plan will be effective for the 3-5 year period. After this time frame the payments can be adjusted.

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