The Chapter 13 Bankruptcy Process in Texas
Howard Tagg is an experienced Texas bankruptcy attorney serving clients in Smith County and surrounding communities
Chapter 13 differs from Chapter 7 in that it involves a debtor filing a payment plan with a bankruptcy court. The amount the debtor will repay to creditors under the plan will vary based on a debtor’s particular circumstances. The payments made to creditors under the plan must total at least as much as creditors would have received if the debtor filed a case under Chapter 7. The payments are made to a trustee, who distributes the payments to the creditors. The plan lasts either until you pay your debts in full or until the end of five years. You receive a discharge after the plan.In Chapter 13 debtors who possess income that is too high to qualify for Chapter 7 can protect non-exempt assets from the liquidation process.
Debtors with substantial income and assets will often seek relief under Chapter 13 because they cannot qualify for Chapter 7 under the income “means test.” The means test can be very complicated and a debtor should never decide between Chapter 7 and Chapter 13 without first consulting a bankruptcy attorney. To qualify for Chapter 13, an individual must have a regular income that can cover the cost of the payment plan, either through employment, the operation of a business, or some other source.A person may not file for Chapter 13 if:
- He or she has filed for bankruptcy in the preceding 180 days; and
- The bankruptcy case was dismissed by a court due to a willful failure on the part of the person to abide by the orders of that court; or
- The person dismissed their bankruptcy after a creditor asked for relief from an automatic stay
