Chapter 13 Bankruptcy

What is Chapter 13 Bankruptcy?

Acker Warren, P.C. represents people and sole proprietors who need Chapter 13 Bankruptcy.  Most commonly Chapter 13 Bankruptcy is filed to repay mortgage arrears, vehicle arrears, IRS debts, or child support arrears.  Upon completion of a Chapter 13 Plan many of our clients discharge credit cards debts, payday loans, signature loans, medical bills, utility bills, judgments, and deficiency balances due to a repossession or foreclosure without repayment in full.

Our clients find that filing Chapter 13 Bankruptcy is often the cheapest, easiest, and most effective way to stop a foreclosure or repossession.  Clients are able to repay some debts while often discharging their unsecured debts (i.e. credit card debt, medical bills, payday loans, etc.).  Bringing a delinquent mortgage or vehicle loan current is often not an option our clients can afford.  Fortunately, Chapter 13 Bankruptcy can give you the ability to reorganize your debts, bring mortgage or vehicle loans current, repay non-dischargeable IRS debts, and repay Child Support Arrears.

Some immediate results you can expect after filing a Chapter 13 Bankruptcy:

  • Foreclosure stops – The creditor must ask court permission first before foreclosing
  • Repossession stops – The creditor must ask court permission first before taking a car
  • IRS Levy stops – Collection actions must stop (including levies and garnishments)
  • Eviction stops – The landlord must ask court permission first before evicting
  • Collection Lawsuits stop – Court proceedings for debt collection law suit must stop
  • Collection calls stop – Debt collectors are required to stop calling you
  • Garnishments stop – Debt collectors are required to stop garnishing wages

The reason all these collection actions must stop is because when our clients file for Chapter 13 Bankruptcy protection, Federal Bankruptcy Law says that all collection actions are stayed (with very few exceptions).

 

When researching filing for Chapter 13, two big factors to consider are:

  1. How much will my monthly plan payment be and how long will I have to pay?
  2. Will I lose any of my assets?

Chapter 13 Plan payment amounts are largely based on the amount of arrears owed on mortgages, vehicles, amounts due to the IRS, and Child Support arrearage.  Most Chapter 13 Debtors are not required to pay their unsecured creditors in full.  Many do not have to pay unsecured creditors at all.  Unsecured debts will be discharged, meaning your legal liability to pay for them upon completion of your plan will be extinguished.

There are two types of Chapter 13 Debtors when it comes to length of a Chapter 13 Plan.  Determining which type of Debtor you are, is based upon your household income.  If your household income is below the median income for a household of your size in your county, you will qualify for a plan that lasts a minimum of 36 months or a maximum of 60 months without repayment in full of your unsecured creditors.  If your income qualifies you as above median, you will be required to stay in your plan for the maximum term of 60 months unless all unsecured creditors are repaid in full.  In either case the result is the same: repayment of some debts and the discharge of the remaining.  Our attorneys can help with this assessment, usually over a quick phone consultation.

Secondly, most Chapter 13 Debtors do not lose any of their assets, including their home. This is because a Chapter 13 Bankruptcy gives you the option to repay arrears on items that have a lien against them such as your house or car and bring those notes current over the life of the Chapter 13 Plan. Texas also has very strong exemption laws that protect the property of most Debtors. Further, in Texas, debtors may also elect to use Federal Exemptions, which, in some circumstances, protects your property even better than the Texas exemption laws. If neither scheme protects all of your property a Chapter 13 allows a Debtor to retain property that would otherwise be lost in a Chapter 7 by paying the value of that property thorough the plan payment as a distribution to the unsecured creditors. Our attorneys can help you assess if you have any non-exempt property, usually over a quick phone consultation.

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