Chapter 13 Bankruptcy

Chapter 13 Bankruptcy in Texas

Most people don’t fall behind because they’re irresponsible. They fall behind because life gets expensive or unpredictable—medical issues, job changes, divorce, rising costs, or simply trying to keep up.

If you have regular income but need time and legal protection to catch up, Chapter 13 bankruptcy can be a powerful tool.

At Reaves & Lee, Jon Reaves and Christopher Lee represent Chapter 13 clients throughout Texas, with a substantial portion of the firm’s bankruptcy practice concentrated in Dallas-Fort Worth and North Texas. Our attorneys regularly handle Chapter 13 cases involving foreclosure, vehicle debt, tax obligations, creditor lawsuits, business ownership, and other complex financial issues.

Reasons People File Chapter 13 Bankruptcy

Chapter 13 is designed for people who have regular income but need time to reorganize their financial obligations.

People often file Chapter 13 to:

• Stop foreclosure and catch up on missed mortgage payments over time;
• Stop repossession and address vehicle debt through a repayment plan;
• Stop lawsuits, bank-account garnishments, and other collection activity;
• Deal with tax debt and other priority obligations;
• Protect property that may create problems in Chapter 7; and
• Create a structured repayment plan based on their income, expenses, debts, and assets.

If one of these situations sounds familiar, we can evaluate whether Chapter 13 is realistic for your budget and goals.

What is Chapter 13 Bankruptcy?

Chapter 13 is a court-supervised repayment plan that allows individuals with regular income to reorganize their debts while keeping property and receiving protection from most collection activity.

Chapter 13 plans generally last three to five years. During the case, the debtor makes regular payments to a Chapter 13 trustee, who distributes funds to creditors according to the terms of the confirmed plan.

Depending on the circumstances, Chapter 13 can allow you to:

• Catch up on missed mortgage payments;
• Restructure certain vehicle debt;
• Pay taxes and other priority obligations over time;
• Protect property that might create issues in Chapter 7; and
• Discharge eligible unsecured debt after successfully completing the plan.

Chapter 7 vs. Chapter 13

Many people are unsure which type of bankruptcy is appropriate. That is normal.

Chapter 7

Chapter 7 often provides a relatively quick discharge of unsecured debt. It may be a good option when you qualify financially and do not need a long-term repayment plan to cure mortgage, vehicle, tax, or other secured obligations.

Chapter 13

Chapter 13 is often a better fit when you:

• Have regular income;
• Need to stop foreclosure or repossession;
• Need time to catch up on secured debt;
• Need a structured way to deal with taxes or other priority obligations; or
• Need to protect property while reorganizing your finances.

Learn more about Chapter 7 bankruptcy in Texas

The Automatic Stay: Protection From Creditors

Once a Chapter 13 case is filed, the automatic stay typically stops most collection activity, including:

• Collection calls and letters;
• Many lawsuits and collection actions;
• Bank-account garnishments and other collection remedies;
• Repossession efforts; and
• Foreclosure activity.

There are exceptions, and the protection of the automatic stay can be limited in some repeat-filing situations. Creditors may also ask the Bankruptcy Court for permission to proceed.

Timing matters. If a foreclosure sale or repossession is approaching, your options can narrow quickly. The earlier you act, the more options you generally have.

How Chapter 13 Can Stop Foreclosure in Texas

If you are behind on your mortgage, Chapter 13 can provide a way to stop a pending foreclosure and catch up on missed payments over time.

Depending on the circumstances, Chapter 13 may allow you to:

• Stop a foreclosure sale before it occurs;
• Keep your home while curing mortgage arrears through the plan;
• Maintain required post-filing mortgage payments; and
• Spread substantial mortgage arrears over the life of the Chapter 13 plan.

Timing is critical. If your home has already been posted for foreclosure, speak with a bankruptcy attorney as early as possible.

Can I Keep My Car If I’m Behind on Payments?

Chapter 13 can often help people who are behind on a vehicle loan but need to keep reliable transportation.

Depending on the facts, Chapter 13 may allow you to:

• Stop a pending repossession;
• Address missed vehicle payments through the plan; and
• Restructure certain vehicle debt in a way that makes repayment more manageable.

How a particular vehicle loan can be treated depends on factors such as when the vehicle was purchased, the loan terms, the value of the vehicle, and the debtor’s budget.

Who Qualifies for Chapter 13 in Texas?

Chapter 13 is available to individuals with regular income who can propose a feasible repayment plan.

Eligibility depends on several factors, including your income, expenses, debts, property, prior bankruptcy cases, and ability to make the required plan payment.

Regular income can come from wages, self-employment, retirement income, or other sufficiently stable sources. The important question is whether there is enough reliable income to fund a workable Chapter 13 plan after necessary living expenses.

Chapter 13 also has statutory debt limits. Currently, an individual generally must have less than $526,700 in noncontingent, liquidated unsecured debt and less than $1,580,125 in noncontingent, liquidated secured debt. These limits are periodically adjusted. We review your debts before filing to determine whether you are eligible for Chapter 13.

How Chapter 13 Treats Different Debts

Mortgage and Vehicle Debt

Chapter 13 can often allow debtors to keep secured property while addressing missed payments through the plan. Ongoing payments and arrears must be treated correctly for the debtor to retain the property.

Taxes and Domestic Support Obligations

Certain tax debts and domestic support obligations receive priority treatment and may have to be paid in full through the plan or otherwise remain current.

Credit Cards, Medical Bills, and Other Unsecured Debt

Unsecured creditors do not always have to be paid in full.

The amount paid to unsecured creditors depends on several factors, including:

• Disposable income;
• Necessary living expenses;
• The value of nonexempt property; and
• Other legal requirements governing confirmation of the plan.

Some Chapter 13 debtors repay a substantial portion of unsecured debt. Others repay very little. Eligible unpaid balances may be discharged after successful completion of the plan.

What the Chapter 13 Process Looks Like

1. Consultation to review income, debts, property, and goals.
2. Filing of the Chapter 13 case and proposed repayment plan.
3. Automatic stay protection generally begins when the case is filed.
4. Chapter 13 plan payments begin, generally within 30 days after the case is filed, even if the plan has not yet been confirmed.
5. Meeting of Creditors, also called the 341 meeting, where the Chapter 13 trustee asks questions under oath about your financial circumstances and bankruptcy paperwork.
6. Plan confirmation, during which the Bankruptcy Court determines whether the plan satisfies the requirements of the Bankruptcy Code.
7. Plan completion, generally after three to five years.
8. Discharge of eligible remaining debts after successful completion of the plan.

If your financial situation changes during the case, modification of the plan may be possible depending on the circumstances.

Why Clients Choose Reaves & Lee

Reaves & Lee represents Chapter 13 debtors throughout Texas while maintaining a particularly active bankruptcy practice in Dallas-Fort Worth and North Texas.

Our attorneys regularly practice in the Northern District of Texas, including the Dallas and Fort Worth Divisions, and also represent eligible clients in bankruptcy courts elsewhere in Texas.

Clients choose Reaves & Lee because:

• You can speak with a lawyer, not simply a call center;
• We explain your options in plain English;
• We develop Chapter 13 plans designed around the realities of your financial situation;
• We regularly handle foreclosure, vehicle, tax, business, and creditor issues; and
• We remain involved throughout the life of the case.

Talk to a Chapter 13 Bankruptcy Lawyer in Texas

If you are facing foreclosure, repossession, creditor lawsuits, bank garnishment, tax debt, or constant collection pressure, Chapter 13 may provide the structure and legal protection you need to regain financial stability.

Reaves & Lee represents Chapter 13 clients throughout Texas, with substantial experience serving Dallas-Fort Worth and North Texas.

Call Reaves & Lee: (817) 203-0585

This page provides general information and is not legal advice. Results depend on the facts of each case.