If you have been struggling to keep up with your monthly bills for a long time, you might have reached a point where you want to explore your options for getting ahead financially. Perhaps you have tried debt consolidation loans or have been looking for a job that pays more. Sometimes, those are not enough. No matter how hard you try, you just cannot get your debt under control. It can be overwhelming and exhausting.
Maybe you have considered filing for bankruptcy, but your income is too high to discharge all of your debt through Chapter 7 bankruptcy. Perhaps you want to pay your debt but make it more manageable, just as more than 9,300 Texans did in 2020 by filing for Chapter 13 bankruptcy.
If you are weary of trying to keep up, Chapter 13 may provide the solution you need to get your financial situation back on track. At Swindell Law Firm, I have guided thousands of clients in Amarillo, Texas, Borger, Pampa, Hereford, Dumas, and other areas of Texas through Chapter 13 bankruptcy. Reach out to me today to get started.
Chapter 13 bankruptcy is often referred to as the “repayment plan” or “wage earner's plan” bankruptcy. This is because it does not simply wipe out all of your debt. Instead, it offers you the opportunity to keep the property you own in exchange for agreeing to pay back creditors over a three- to five-year period. Chapter 13 is a good option for people who have a regular income and want to get their debt under control by managing it more effectively.
With a Chapter 13 bankruptcy, people can avoid foreclosure on their home or having their vehicle repossessed due to late and missed mortgage and loan payments by offering a way to “catch up” with overdue payments. Upon filing, the court orders a “stay” that prohibits creditors from foreclosing on your home while you catch up on what you are behind during the repayment period. Chapter 13 can also allow you to redistribute other secured debt over the repayment period of three to five years and can protect people who co-signed for your secured debt.
Similar to a debt consolidation loan, you retain your debt in Chapter 13, but it is restructured in a way that makes it easier for you to pay off with discretionary income over time. It can help you avoid losing your secured property and soften the impact bankruptcy can have on your credit score.
Chapter 13 bankruptcy will not discharge debts such as child support, alimony, and taxes. You will need to keep current with those payments throughout the life of the bankruptcy, but Chapter 13 might help you catch up with payments in arrears.
To file for Chapter 13, you must meet certain requirements regarding secured and unsecured debt, have a steady income, and file as an individual rather than as a business. Sole proprietorships may qualify to restructure combined personal and business debt.
Until April 2022, your secured debt must be less than $1,257,850. Secured debt is anything secured by the property itself, such as a real estate mortgage or vehicle loan. Unsecured debt may not exceed $419,275. This includes debt from items such as credit cards and medical bills.
You will need to prove to the court that your income is regular and sufficient to pay your normal monthly obligations as well as the monthly repayment sum. You will also need to demonstrate that you are filing for relief in good faith and not attempting to abuse the law.
To file for Chapter 13 bankruptcy, you will need to provide:
A list of all creditors, the amount owed to them, and the nature of the debt
The source, amount, and frequency of your income
A list of all of your property
A detailed list of your monthly expenses, including debt, groceries, transportation, taxes, utilities, etc.
Individuals filing for Chapter 13 bankruptcy who are married must file this information about their spouse, even if the two of you are not filing jointly for relief.
If you meet the requirements and demonstrate the ability to maintain the monthly installment plan, you will pay the monthly lump sum to a court-appointed trustee who will then distribute it to your creditors as specified in the repayment plan approved by the court. If you are successful, the court will discharge your bankruptcy at the end of the repayment period.
Filing for Chapter 13 bankruptcy requires a careful and thoughtful assessment of your existing debt. An experienced bankruptcy attorney can help you navigate the legal process. Your attorney can also help you make changes that will not only get your debt under control but help you make better financial decisions in the future.
At the Swindell Law Firm, I have spent more than 40 years helping clients use Chapter 13 bankruptcy to manage their debt. If you live in Amarillo, Texas, Borger, Pampa, Hereford, Dumas, or anywhere in the Texas panhandle, call my office today to talk about your bankruptcy options. After struggling for so long, you may find relief within your grasp.