What is the downside of filing for bankruptcy Chapter 13 in Texas?

Chapter 13 is far more complicated than chapter 7, so you may want to hire a bankruptcy lawyer. The cost can be rolled into your payment plan.

Do you pay back everything in Chapter 13?

In general, yes, you pay debts in full, but it depends on what agreements you reach with creditors. The plus side of a repayment schedule includes flexibility for the plan payments. The trustee program can allow more repayment options to be under the debtor's control.

What qualifies you for Texas Chapter 13?

You can qualify for Chapter 13 if your combined total secured and unsecured debts are less than $2,750,000. Your trustee may recommend that your Chapter 13 be changed to a Chapter 7 bankruptcy.

How long does it take to file Chapter 13 in Texas?

It can take up to five years to fulfill your repayment plan and discharge your petition. This is far longer than a Chapter 7 bankruptcy.

Is Chapter 13 a good idea in Texas?

If you are in over your head in debt and are above the means tests limits, Chapter 13 may be your best bet. However, make certain you understand the issues that come with the bankruptcy filing.

How long does Chapter 13 stay on your credit report?

Bankruptcies stay on your credit report for up to 7 years. Chapter 7 bankruptcy stays on your credit report for up to 10 years.

How do you prepare for a meeting with your trustee?

Once you file for Chapter 13 bankruptcy, you will be scheduled to meet with your bankruptcy trustee. This meeting is called a 341 Hearing or creditors meeting, and you are under oath when you answer questions. You'll be asked questions about your bankruptcy paperwork. This meeting can be very short if everything lines up between your supporting documentation and your bankruptcy packet. The questions may include some of the following: Did you review your petition and schedules before you filed them with the court? Is all information in your bankruptcy papers true and correct to the best of your knowledge? Did you disclose all of your assets? Did you list all of your creditors? Have you filed for bankruptcy before? Has anything changed since filing your bankruptcy? Are you required to pay any domestic support obligations such as alimony or child support? Have you filed all tax returns as they have come due? Have you made any payments to creditors exceeding $600 in the last year? Have you transferred any property or given any security interests in the last two years? Have you used any credit cards in the last year? How did you calculate the value of your assets? Do you own an interest in a business or partnership? Are you the beneficiary, trustee, or trustor of a trust? When was the last time you refinanced your house? You should bring with you a photo id, copy of your social security card, and any new, unsubmitted documents that may support your case. It is possible but not probable that unsecured creditors will attend the meeting and also question you.

Chapter 13 Bankruptcy Texas

Chapter 13 is named for the specific section of the bankruptcy code that allows for the personal reorganization of debt.

You should always consult a bankruptcy attorney before filing for bankruptcy.

Chapter 13 bankruptcy in Texas

A Chapter 13 bankruptcy is a "reorganization" bankruptcy that allows people with regular income to repay all or part of their debts. Under this plan, you make regular monthly payments to a trustee who then distributes money to creditors.

Chapter 13 is designed for people who have a steady income and want to keep their property, while Chapter 7 is for people who don't have a lot of assets and want to discharge their debt. Chapter 13 allows you to catch up on car payments and missed mortgage payments.

Who can file for chapter 13 bankruptcy in Texas

According to federal law, any individual can file for chapter 13 as long as the individual's combined total secured and unsecured debts are less than $2,750,000.

You cannot file for Chapter 13 bankruptcy in Texas if, within the past 180 days, a prior bankruptcy petition was dismissed due to willful failure to appear or comply with the court or was voluntarily dismissed

How to file for chapter 13 bankruptcy in Texas

To file for Chapter 13 bankruptcy in Texas, you must complete a credit counseling course with an approved agency within 6 months of filing your petition.

Next in the bankruptcy process, you will need to fill out the following forms:

Form 101 (“Voluntary Petition for Individuals Filing Bankruptcy”)
Certificate of completion for required credit counseling
Form 106Dec (Declaration About an Individual Debtor's Schedules)
Form 106Sum (Summary of Your Assets and Liabilities and Certain Statistical Information) details the total value of your property, total debt amounts, and information about income and expenses.
Form 106A/B (Schedule A/B: Property) lists all belongings and must include an estimate of how much they could be sold for.
Form 106C (“Schedule C”) instructs the bankruptcy trustee as to what property is protected by an exemption.
Form 106D (Schedule D) lists secured debt like real property (like a house) or personal property (car loans)
Form 106E/F (Schedule E/F) lists all other debts like credit card debt
Form 106G (Executory Contracts and Unexpired Leases (individuals)) includes home rentals, car leases, or other long-term contracts.
Form 106H (Schedule H: Your Codebtors) must be filed even if there are no co-debtors
Form 106I (Schedule I) lists all income, including unpaid commissions for personal services
Form 106J (Schedule J: Your Expenses (individuals)) includes how much you spend monthly on things like rent, food, transportation, etc
Form 107 (Your Statement of Financial Affairs for Individuals Filing for Bankruptcy) covers information about your financial situation that is not part of the schedules, including pending legal actions
Form 113 (Chapter 13 Plan) FYI - courts often require a local plan form instead of the official form. This is your repayment plan.
Form 121 (Your Statement About Your Social Security Numbers)
Form 122C-1 (Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period)
Form 122C-2 (Chapter 13 Calculation of Your Disposable Income)
Form 423 (Certification About a Financial Management Course)
2010 Notice Required by 11 U.S.C. §342(b) for Individuals Filing for Bankruptcy
A creditor matrix is a list of all creditors and their addresses and is usually accompanied by verification. Ask your local bankruptcy court for the preferred format.
Pay the filing fee of $245

You may need the following forms:

Form 101A (Initial Statement About an Eviction Judgment Against You) is filed if you’re behind on your rent and your landlord has received a judgment to evict you.
Form 101B (Statement About Payment of an Eviction Judgment Against You) is filed if you have an eviction judgment against you.
Form 106J-2 (Schedule J-2: Expenses for Separate Household of Debtor 2) is filed by a married couple who both filed for bankruptcy but do not live together.
Form 119 (Preparer's Notice, Declaration and Signature)
2030 Disclosure of Compensation of Attorney for Debtor

Finally, you may need to file local forms as your bankruptcy court district requires. Always ask the clerk what forms you need to file and what format they prefer. As you can see, the Texas bankruptcy process can be very complex.

The benefits of filing chapter 13 bankruptcy in Texas

The Pros of Chapter 13 Bankruptcy

Consolidates debt into one affordable payment
Keep your home and car as long as you are making payments
Makeup mortgage arrears without penalty or interest and can stop foreclosure proceedings
Usually, you can keep an income tax refund
May be able to discharge some tax debt
Opportunity to repay creditors over a longer period of time
May reduce the debt amount or interest rate that you owe
Stop defaults and missed payments to help structure a plan to pay back debts in a timely manner
Automatic stay on your debts once you file

The Cons of Chapter 13 Bankruptcy

Stays on credit for 7 years. For more about credit scores, follow this link.
The following debts are not included:
tax debt or government fees
mortgages
child support obligations or alimony
any student loan debt
any car loan
Takes up to 5 years to complete
High fees and costs
Can lose your home and assets

The disadvantages of filing for chapter 13 bankruptcy in Texas

Some of the disadvantages of filing bankruptcy in Texas include the cost, the amount of time invested, the possibility of losing your home, and credit damage. However, if you really need to file for bankruptcy, you should speak with a bankruptcy attorney to understand what will happen.

Texas Bankruptcy Exemptions

Texas bankruptcy exemptions include the following if you have lived in Texas for the previous 730 days.

Texas Homestead Exemption

This exemption protects unlimited equity in your principal residence. It applies to properties of 10 acres or less in a city or 100 acres or less (families can double this to 200 acres) in the country

Texas Motor Vehicle Exemption

This allows you to exempt the entire value of one motor vehicle per licensed household member. Motor vehicles must be included in the $50,000/$100,000 exemption cap.

Texas Personal Property Exemptions

The exempt personal property other than real estate cannot exceed a total of $50,000 (single adult) or $100,000 (family). You must include the following items in the paperwork:

Home furnishings, including family heirlooms
Clothing and food
Farming and ranching vehicles and implements
Tools of the trade, books, equipment, commercial boat, or vehicles
Jewelry is limited to $12,500 (single filer) and $25,000 (family)
Two firearms
Athletic and sporting equipment, including bicycles
Animals, including pets and domestic animals plus their food; two horses, mules, or donkeys, plus tack; 12 head of cattle; 60 head of other livestock; and 120 fowl

Not included in the cap:

Current wages except for court-ordered support
Health aids such as wheelchairs, canes, and hearing aids
Alimony, support, and maintenance
Bibles or other books containing sacred religious writings
Burial plots

Pensions and Retirement Accounts

Most tax-exempt pensions and retirement accounts are exempt including:

Qualified retirement plans
State employees; teachers; judges; county and district employees; municipal employees.
Firefighters; policemen

Insurance Exemptions

Texas allows people to set aside some insurance benefits.

Fraternal benefits society benefits
Life, health, accident, or annuity benefits, including any money, policy proceeds, or cash value due to or paid to the beneficiary or insured
Texas state employee group life insurance

Other Bankruptcy Exemptions

Texas offers exemptions on other financial affairs.

College savings plans
Crime victim's award
Public officers killed in duty survivors benefits
AFDC, welfare, and foster care benefits
Medical assistance
Interest in specific partnership property
Unemployment benefits and workers' compensation

FAQ

What is the downside of filing for bankruptcy Chapter 13 in Texas?

Chapter 13 is far more complicated than chapter 7, so you may want to hire a bankruptcy lawyer. The cost can be rolled into your payment plan.
Do you pay back everything in Chapter 13?

In general, yes, you pay debts in full, but it depends on what agreements you reach with creditors. The plus side of a repayment schedule includes flexibility for the plan payments.

The trustee program can allow more repayment options to be under the debtor's control.
What qualifies you for Texas Chapter 13?

You can qualify for Chapter 13 if your combined total secured and unsecured debts are less than $2,750,000.

Your trustee may recommend that your Chapter 13 be changed to a Chapter 7 bankruptcy.
How long does it take to file Chapter 13 in Texas?

It can take up to five years to fulfill your repayment plan and discharge your petition. This is far longer than a Chapter 7 bankruptcy.
Is Chapter 13 a good idea in Texas?

If you are in over your head in debt and are above the means tests limits, Chapter 13 may be your best bet.

However, make certain you understand the issues that come with the bankruptcy filing.
How long does Chapter 13 stay on your credit report?

Bankruptcies stay on your credit report for up to 7 years. Chapter 7 bankruptcy stays on your credit report for up to 10 years.
How do you prepare for a meeting with your trustee?
Once you file for Chapter 13 bankruptcy, you will be scheduled to meet with your bankruptcy trustee. This meeting is called a 341 Hearing or creditors meeting, and you are under oath when you answer questions.

You'll be asked questions about your bankruptcy paperwork.

This meeting can be very short if everything lines up between your supporting documentation and your bankruptcy packet.

The questions may include some of the following:
- Did you review your petition and schedules before you filed them with the court?
- Is all information in your bankruptcy papers true and correct to the best of your knowledge?
- Did you disclose all of your assets?
- Did you list all of your creditors?
- Have you filed for bankruptcy before?
- Has anything changed since filing your bankruptcy?
- Are you required to pay any domestic support obligations such as alimony or child support?
- Have you filed all tax returns as they have come due?
- Have you made any payments to creditors exceeding $600 in the last year?
- Have you transferred any property or given any security interests in the last two years?
- Have you used any credit cards in the last year?
- How did you calculate the value of your assets?
- Do you own an interest in a business or partnership?
- Are you the beneficiary, trustee, or trustor of a trust?
- When was the last time you refinanced your house?
You should bring with you a photo id, copy of your social security card, and any new, unsubmitted documents that may support your case.

It is possible but not probable that unsecured creditors will attend the meeting and also question you.

Chapter 13 Bankruptcy Alternatives

There are some alternatives to bankruptcy if you live in Texas. Companies like Pacific Debt can help you reduce debt without going through bankruptcy.

Pacific Debt Relief

We are a debt settlement company that can help you to settle debts and pay the settled amount without the expense, effort, embarrassment, and credit damage that comes with bankruptcy. Our monthly payment plan is based on your budget.

If you are considering filing Chapter 13 bankruptcy in Texas, call us for a free consultation with one of our award-winning debt specialists. The specialists will help you understand all your options.

To learn more about debt settlement, check out this link.