DFW Ch. 13 Lawyer
Understanding the Bankruptcy Payment Plan
Chapter 13, also known as the "wage earner's plan," is available to consumers who have a stable, regular source of income. Unlike Chapter 7 filings, Chapter 13 cases involves no liquidation of assets. By allowing consumers to reorganize and consolidate their debts into more manageable payment plans, Chapter 13 bankruptcy is often an effective debt relief option for those who wish to keep most, if not all, of their personal property while still making payments toward their preexisting debt.
Qualifying for Chapter 13
As Chapter 13 involves a monthly payment plan, you must have the available funds to pay at least a certain percentage of your preexisting debt. You will need to have a stable source of income and sufficient disposable income, which includes the leftover funds after you have after paying fixed expenses, including housing costs, food, and other essential expenses. Qualifying for Chapter 13 differs greatly from the qualifying process for Chapter 7 protection, which is reserved for consumers who lack the funds needed to pay any amount toward their debt.
Understanding Ch. 13
Just as with any legal proceeding, Chapter 13 will begin when you formally submit a petition to the court. An automatic stay will then be issued, protecting you from all collection activities. Foreclosure proceedings, repossessions, wage garnishment, and other forms of collections will cease while your bankruptcy is pending. The court will then review and evaluate your financial situation in order to determine the terms and length of your Chapter 13 repayment plan.
Chapter 13 Payment Plan
Based on your income, disposable income, expenses, and debt, the court will make a determination regarding your payment plan. While exceptions may apply in some cases, the length of the Chapter 13 payment plan will be determined as follows:
- If your average monthly income is less than the median monthly income for the state of Texas, then you may be eligible to enact a payment plan that lasts three years.
- If your average monthly income is greater than Texas' median monthly income, then you most likely will be required to enact a plan that lasts five years.
Once the duration of your payment plan has been established, you will be required to make one consolidated monthly payment to a local trustee, who will then disburse funds to the creditors to whom you owe debts. After all terms and conditions have been fulfilled, you may be eligible to obtain a debt discharge for any remaining balance owed on certain unsecured debts. Unsecured debts typically eligible for a discharge include credit card debt, medical bills, personal and payday loans, and others. Although the discharge awarded in Chapter 13 cases may not always be as extensive as discharges awarded in Chapter 7 cases, it can still provide substantial debt relief and the financial fresh start you deserve.
Request a Free Case Evaluation with an Attorney
Prepared to guide you through each step of the Chapter 13 process, our legal team can help you understand precisely how Chapter 13 bankruptcy works and what you can expect during your unique process. Our bankruptcy lawyers can provide you with the reassurance of knowing that highly experienced, passionate, and attentive legal minds will always be by your side. As we have the ability to see the curve balls before they're thrown, and because we are not afraid of tackling challenging issues, you can gain further confidence knowing that hardworking people, people just like you, have your back. If you would like to learn more about Chapter 13 bankruptcy, or if you wish to discuss your case, please us today.
