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Chapter 13 bankruptcy is most often used by individuals who have a steady income. It allows you to keep your property and repay your debts over a period of time. You will be required to make monthly payments to a trustee until your debts are discharged.
At the Law Office of Mark M. Childress, we can determine if Chapter 13 bankruptcy is right for you and help you navigate this process to help you obtain financial freedom once again. Do not hesitate to let our team evaluate your situation and create a plan just for you.
Chapter 13 bankruptcy is a legal process available in the United States under the federal bankruptcy code. It is designed to provide individuals with a structured way to reorganize their finances and repay their debts over a period of time, usually three to five years.
Chapter 13 bankruptcy is often referred to as a "wage earner's plan" because it is typically used by individuals with a steady source of income to create a manageable debt repayment plan.
The following are the benefits of filing Chapter 13 bankruptcy in Texas:
Debt Repayment Plan: When you file for Chapter 13 bankruptcy in Texas, you'll work with the bankruptcy court to create a repayment plan. This plan outlines how you will repay your debts over a specified period, usually three to five years. Your monthly payments are based on your income, expenses, and the types of debts you owe.
Protection from Creditors: One of the immediate benefits of filing for Chapter 13 bankruptcy is the automatic stay. This legal injunction prevents creditors from taking any collection actions against you while your bankruptcy case is ongoing. This includes stopping foreclosure proceedings, wage garnishments, and harassing phone calls from creditors.
Debt Consolidation: Chapter 13 bankruptcy allows you to consolidate most of your unsecured debts (such as credit card debt and medical bills) into one monthly payment. This can make it easier to manage your debts and stay on track with your payments.
Asset Protection: Unlike Chapter 7 bankruptcy, which involves liquidating assets to repay creditors, Chapter 13 allows you to keep your property and assets. You can include past-due mortgage payments or car loans in your repayment plan to prevent foreclosure or repossession.
Discharge of Some Debts: At the end of your repayment plan, you may receive a discharge of any remaining unsecured debts that were part of the plan. This means that you are no longer legally obligated to pay these debts, offering you a fresh financial start.
Affordable Monthly Payments: Your monthly payments in a Chapter 13 plan are based on your disposable income, which means they are designed to be affordable and manageable based on your financial situation.
Co-Debtor Protection: If you have co-signers on your debts, they may be protected from creditor actions during the Chapter 13 bankruptcy process. This can be particularly important for family members or friends who may have co-signed loans with you.
Potential to Modify Secured Debts: In some cases, you may be able to modify or reduce the principal balance of certain secured debts, such as second mortgages on underwater properties, through a process called "lien stripping."
How to File Chapter 13 Bankruptcy in Texas
Filing for Chapter 13 bankruptcy in Texas involves a complex legal process, which is why you must seek the counsel of an experienced bankruptcy attorney. Your lawyer will assess your financial situation, help you understand if Chapter 13 is the right choice for you, and guide you through the entire process.
Here is a general overview of the Chapter 13 bankruptcy process in Texas:
Credit Counseling: Before filing for Chapter 13 bankruptcy, you must complete a credit counseling course from an approved agency. The certificate of completion must be filed along with your bankruptcy petition.
Gather Financial Documents: Collect all relevant financial documents, including income statements, tax returns, a list of assets and liabilities, recent bank statements, and details of any outstanding debts.
File the Petition: Your attorney will help you prepare the bankruptcy petition and all necessary schedules and forms. These documents are filed with the Texas bankruptcy court. You will also need to pay the required filing fee, which varies depending on your jurisdiction and financial situation.
Automatic Stay: Once your petition is filed, an automatic stay goes into effect. This means that creditors are prohibited from attempting to collect debts during the bankruptcy process.
Chapter 13 Repayment Plan: You and your attorney will develop a proposed Chapter 13 repayment plan. This plan outlines how you will repay your creditors over a period of 3 to 5 years. The court will review and approve the plan, and it must be feasible based on your income and expenses.
Meeting of Creditors (341 Meeting): You will be required to attend a meeting of creditors, also known as the 341 Meeting. During this meeting, the bankruptcy trustee and your creditors have the opportunity to ask you questions about your financial situation and proposed repayment plan.
Confirmation Hearing: If your repayment plan is accepted by the creditors and the bankruptcy trustee, the court will hold a confirmation hearing to approve the plan formally.
Making Payments: Once your Chapter 13 plan is confirmed, you must make regular payments to the bankruptcy trustee. The trustee will distribute these payments to your creditors according to the approved plan.
Completion of the Plan: You will need to complete all payments as specified in your Chapter 13 plan, which typically lasts between 3 and 5 years.
Discharge of Debts: After successfully completing your repayment plan, the remaining eligible debts will be discharged, meaning you are no longer legally obligated to repay them.
Financial Management Course: Before receiving your bankruptcy discharge, you must complete a financial management course from an approved agency and file the certificate of completion with the court.
Closing the Case: Once all requirements are met, and any remaining obligations are fulfilled, the court will close your Chapter 13 bankruptcy case, and you will receive your discharge.
Get Help from a Seasoned Chapter 13 Bankruptcy Attorney
Chapter 13 bankruptcy is a great way to consolidate and pay off your debt. Consulting with a seasoned attorney is the best way to determine if Chapter 13 bankruptcy is right for you. At the Law Office of Mark M. Childress, we can help you file for Chapter 13 bankruptcy and can also help you if you are threatened with repossession or foreclosure.
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