Skip to navigation
Laptop and pen


May 29, 2018

Chapter 13 bankruptcy is only available to individuals, sole proprietorships, and individuals who are self-employed or operating an unincorporated business. Corporations or partnerships do not qualify for this type of bankruptcy. There are debt limits for qualifying for Chapter 13 bankruptcy, which is tied to the consumer price index. Currently, individuals are eligible as long as their unsecured debts are under $360,475 and secured debts are under $1,081,400.

Two other requirements affect eligibility. A debtor cannot file for bankruptcy if in the prior 180 days a bankruptcy court had dismissed their case for failure to appear or comply, or if the debtor voluntarily dismissed a petition. A debtor must also have had credit counseling from an approved agency within the 180 days prior to filing.

Chapter 13 bankruptcy allows individual debtors with regular income to reorganize and repay their debts over a period of three to five years. For this reason, it is often referred to as a “wage earner’s plan”. Essentially Chapter 13 bankruptcy is similar to a consolidation loan since a debtor makes payments to the bankruptcy case trustee, who distributes payments to creditors according to the repayment plan.

Filing requirements

There are several important filing requirements for debtors in a Chapter 13 case. First, the debtor must file a petition with the bankruptcy court in their jurisdiction. Additionally, he or she must file the following:

  • Schedules of assets and liabilities

  • Schedule of current income and expenses

  • A statement of financial affairs

  • Schedule of executory contracts and unexpired leases

  • Proof of credit counseling and a copy of any repayment plan created during it

  • Evidence of any payments from employers in the 60 days prior to filing

  • A statement of monthly net income and any anticipated increase in income or expenses

  • A record of any interest the debtor has in qualified education or tuition accounts

Under Chapter 13, a repayment plan is submitted to the trustee and must be approved by the court. The debtor must start making plan payments to the trustee within 30 days of filing for bankruptcy, even if the court has not approved the plan yet.

Some key advantages of Chapter 13 bankruptcy

Chapter 13 offers some advantages over Chapter 7. Individuals do not need to liquidate all their assets, and Chapter 13 allows homeowners to stop foreclosure proceedings while making mortgage payments under the Chapter 13 repayment plan. In some cases where a debtor fails to qualify for Chapter 7, they can convert their case to Chapter 13. Plus, a Chapter 13 bankruptcy only stays on your credit report for seven years, whereas a Chapter 7 bankruptcy will remain on your report for ten years.

Reach out to a knowledgeable Texas bankruptcy attorney

For more assistance in determining how to file for bankruptcy, contact an experienced Texas bankruptcy lawyer at Marcos D. Oliva, P.C.