When is Chapter 13 a Good Debt Relief Option?
Chapter 13 is an ideal debt relief option when:
- You are behind on your car loan or mortgage payments.
- You need more time to catch up on your debts or past-due payments.
- You have tax obligations, fines and penalties, domestic support arrearages, or other kinds of debt that can't be discharged.
- You have non-exempt property that you want to keep.
- You have a co-debtor on a personal debt.
What Can Chapter 13 Bankruptcy Do For Me?
Filing for Chapter 13 bankruptcy can help individuals in the following ways:
- It can allow you to repay debts through a repayment plan.
- It can allow you to catch up on past debts while keeping your assets or property.
- It can allow you to reschedule your secured debts and extend them over the life of the plan.
- You can discharge some unsecured debt at the end of the plan.
- Activates an "automatic stay" on your existing debts. This will stop all creditor harassments, prevent debt collection or wage garnishment.
- Stop an eviction, repossession, or foreclosure on your home.
- Protects third parties who are liable for "consumer debts."
- Ensures no direct contact with creditors.
- Allows you to obtain new lines of credit within one to three years of filing.
- Helps you rebuild your credit score gradually over time.
What Chapter 13 Bankruptcy Cannot Do For You
Chapter 13 will not do the following:
- It will not allow any of your assets to be sold.
- It will not relieve you of your priority debts, such as state, local, and federal taxes, criminal restitution, fines, and penalties.
- It will not relieve you of your obligations to pay child support and alimony.
- It will not get rid of your student loan debt.
How to Qualify for Chapter 13 Bankruptcy
To be eligible for Chapter 13, your secured debts and unsecured debts must not exceed certain amounts. According to U.S. Code Title 11 Bankruptcy Section 109 (11 U.S.C. § 109(e)), an individual with regular income, be it self-employed or operating an unincorporated business, is eligible for chapter 13 bankruptcy as long as:
- The person's secured debts are less than $1,184,200.
- The person's unsecured debts are less than $394,725.
However, these amounts are adjusted occasionally to reflect any changes in the consumer price index.
Mandatory Courses and Filing Fees
When filing your bankruptcy forms, you will be required to tender a certificate showing that you received the mandatory credit counseling education from a U.S Trustee approved agency in Texas. This session will help determine whether you have enough income to repay your creditors. Upon filing your case, you will take a second "debtor education" course.
Understanding The Filing Process
Filing for Chapter 13 requires you to propose a repayment plan. However, before your plan can be approved by the court, you must:
- Be current on your income tax filings
- Be employed and have sufficient income to cover the required monthly payments
- Have enough disposable income to pay back certain debts in full
- Be within debt amount limitations (mentioned above)
Establishing a Repayment Plan
The repayment plan is a major component of the Chapter 13 case. This will be proposed to your creditors and the court. The repayment plan must take all your debts into account. Both the bankruptcy trustee (an independent contractor appointed by the court to oversee your bankruptcy) and your creditors may object to your plan. Upon making required changes to the satisfaction of everyone involved, the Texas court will likely approve your plan during the confirmation hearing.
The Confirmation Hearing
The confirmation hearing is designed to confirm the following:
- The plan is feasible
- The plan complies with bankruptcy law
- The debtor proposed the plan in good faith
Work With a Reliable Chapter 13
Bankruptcy Attorney in McAllen, Texas
According to the American Bankruptcy Institute, in 2019, there were 35,069 bankruptcy cases in Texas, of which approximately 16,460 were Chapter 13 filings. These people didn't go through this process alone, and neither should you. If you are considering filing for Chapter 13 bankruptcy, it is crucial that you consult with a knowledgeable Texas bankruptcy attorney to protect your rights and for proper guidance.
For more than 15 years, Oliva Law Bankruptcy has been offering experienced legal services to clients for all bankruptcy-related matters. As your legal counsel, we will review every aspect of your case, help you understand your possible options, and determine whether or not, Chapter 13 is the right debt relief option for your unique situation. Our attorneys can offer you the comprehensive legal counsel and advocacy you need to navigate the complexities of Chapter 13 bankruptcy.