Chapter 13 Bankruptcy In Texas
Chapter 13 bankruptcy is more commonly known as the wage earner’s plan because it allows a person with a regular income to repay their debts in installments to creditors over a period of three to five years. The length of the plan is usually determined by whether the debtor’s current monthly income falls below or exceeds the state median.
Chapter 13 can be the far more beneficial chapter of bankruptcy for certain people, such as individuals who are looking to save their homes from foreclosure. In many cases, entering a Chapter 13 repayment plan will also end up lowering the monthly payments debtors had been making to their creditors.
“At The Sparrow Law Firm, PLLC, we recognize that each case is uniquely different.”
Houston Chapter 13 Bankruptcy Attorney
If you are working a regular job but still struggle to pay your monthly bills and have run out of options to make your finances work, then Chapter 13 bankruptcy could definitely be the best option for you. It will be in your best interest to quickly contact The Sparrow Law Firm, PLLC, so we can examine your situation and help you enter a repayment plan that can work for you.
Call 281-973-0431 or contact our firm online right away to let our firm help guide you through the Chapter 13 process, as we can make sure that you are able to get a repayment plan that you will be comfortable accepting and paying. The Sparrow Law Firm, PLLC, helps clients throughout the greater Houston area file for Chapter 13 and achieve real financial freedom.
Chapter 13 Process
Unlike Chapter 7, Chapter 13 bankruptcy does impose limits on the amount of debt a person may have. As of 2020, a person is eligible for Chapter 13 so long as their unsecured debts are not more than $419,275 and their secured debts are not more than $1,257,850.
To begin a chapter 13 case, a person must file a petition with the bankruptcy court in the area where they live. They will also have to file schedules of their assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases and a statement of financial affairs.
A debtor also has to file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling as well as evidence of any payment from employers received 60 days before filing. Furthermore, it is also required that a debtor file a statement of monthly net income and any anticipated increase in income or expenses after filing as well as a record of any interest the debtor has in federal or state qualified education or tuition accounts.
A debtor also has to provide the bankruptcy trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case, including tax returns for prior years that had not been filed when the case began. A filing fee and administrative fee will also have to be paid, although these can be paid in installments but failure to pay the fees will result in the case being dismissed.
After a Chapter 13 case has been filed, a bankruptcy trustee will evaluate the case and also act as the party who collects payments and disburses them to the creditors. After a petition is filed, the trustee will schedule a meeting of the creditors within 21 to 50 days. Even though many creditors do not attend the meeting of the creditors, it is still wise to have a lawyer with you so you can be fully prepared for your day in court.
Debtors are sworn under oath and must answer questions from both the trustee and the creditors at the meeting of the creditors. The meeting of the creditors is often important because it can be used to resolve any issues with a debtor’s proposed repayment plan.
When a debtor’s monthly income is less than the state median, then their repayment plan will typically be for three years. If the income exceeds the state median, the repayment plan is usually five years. Repayment plans can never be longer than five years.
Chapter 13 Repayment Plan
A debtor is responsible for filing a proposed repayment plan with the bankruptcy court within 14 days of filing their Chapter 13 petition. The plan has to be submitted for court approval and needs to establish payments of fixed amounts to the trustee on a regular basis, usually every two weeks or monthly.
Chapter 13 claims may be secured, unsecured, or priority. A secured claim involves property that a creditor can take when the debtor does not pay their debt while an unsecured claim means the creditor has no right to reclaim property, and a priority claim typically involves taxes or costs of bankruptcy proceedings that trigger a special status.
Priority claims must be paid in full, and secured claims will require the debtor to repay at least the value of the collateral when the debtor intends to keep the collateral. When obligations underlying secured claims were used to buy collateral and debt was incurred within a certain time frame before the Chapter 13 filing, then the plan will have to cover the full payment of the total debt.
Unsecured claims do not need to be paid in full as long as the debtor pays all disposable income over the course of their plan and the creditors receive at least as much as they would have had the debtor liquidated assets under Chapter 7. Repayment plans for unsecured claims may be less than the three or five year periods provided that the unsecured debt is paid in full over that shorter period.
A debtor will have to begin making payments to the trustee within 30 days of filing their bankruptcy petition, even if the plan has not yet been approved by the court. A bankruptcy judge must hold a confirmation hearing no more than 45 days after the meeting of the creditors.
When a court confirms a repayment plan, the trustee will begin distributing the funds as soon as possible. When plans are declined, the debtor can file a modified plan or they may attempt to convert the case to a Chapter 7 bankruptcy.
Three things will need to happen for a Chapter 13 case to be discharged. First, the debtor has to certify that all domestic support obligations that came due prior to making such certification have been paid. They also must not have received a discharge in a prior case filed within two years for prior chapter 13 cases or four years for prior chapter 7 cases. Finally, the debtor must complete an approved course in financial management.
Courts will not enter a discharge without notice and a hearing. The discharge will release the creditor from all debts provided for by the plan, and creditors cannot continue any collection efforts against a debtor for discharged obligations.
Some debtors may not be able to complete their plans because of unforeseen complications, such as an injury or illness, and a hardship discharge may be available in these cases. A hardship discharge is available only when a debtor’s failure to complete plan payments is due to circumstances beyond their control and through no fault of their own, creditors received at least as much as they would have received in a chapter 7 liquidation case, and modification of the plan is not possible.
“Don’t Be Afraid Of Bankruptcy in Texas”
Ikaha M. Sparrow
Texas Chapter 13 Bankruptcy Resources
Chapter 13 – Bankruptcy Basics | United States Court – Use this section of the United States Courts website to learn more about Chapter 13 bankruptcy, including advantages of Chapter 13 and background information on the history of Chapter 13. There is also information about eligibility, how Chapter 13 works, and the repayment plan and confirmation hearing. You can also learn more about how to make repayment plans work on this website.
What is Chapter 13 Bankruptcy? | TexasLawHelp.org – On this website, learn more about who can file for Chapter 13 and how long Chapter 13 cases take. You can also get a better idea of how much it costs to file for Chapter 13, how to pay in installments, and whether all debt needs to be paid to every creditor. There is also information about calculating how much you must pay your Chapter 13 trustee.
Contact A Chapter 13 Bankruptcy Lawyer In Houston Today
Are you wondering if Chapter 13 bankruptcy might be the best option for your financial problems right now? Make sure that you do not wait to contact The Sparrow Law Firm, PLLC, so we can look over your situation and help you make the most educated choice for your unique situation.
You will want to call 281-973-0431 or contact us online as soon as possible so our firm can quickly begin helping you develop a repayment plan that will work for you. We understand the many complications that can arise in Chapter 13 cases and help people overcome them, so you can confidently file your petition and begin making the payments you need to begin moving your life in the right direction.