Chapter 13 Texas
You can get some relief if you are drowning in debt during these tough times. Filing for bankruptcy can help wipe out part of your debt and stop all aggressive collection efforts from creditors. But since there is more than one type of bankruptcy, you may want to talk to a bankruptcy lawyer to know what type of bankruptcy is appropriate for you. Individuals that are overwhelmed with debt but still have a steady income can file for a Chapter 13 bankruptcy. A Houston Chapter 13 bankruptcy lawyer can answer all your questions and guide you toward financial security.
How A Chapter 13 Bankruptcy Works
Individuals in debt can only file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. You have to file for a Chapter 13 bankruptcy if you have a regular monthly income and significant assets. You can only file for a Chapter 13 bankruptcy if your unsecured debt is not more than $394,725 and your secured debt is not more than $1,184,200.
A Chapter 13 bankruptcy is a debt reorganization bankruptcy. What that means is that you have to present a debt reorganization plan to settle what you owe when you file for a Chapter 13. The reorganization plan must show the amount you will be paying every month, and the payment plan must last for three to five years. Under a Chapter 13 repayment plan, you will repay all of your secured debt and a fraction of your unsecured debt. Once the repayment period in your plan ends, any remaining dischargeable debt will be wiped out. The amount you pay each month is determined by your monthly income.
Secured Vs Unsecured Debt
Secured debt is a kind of debt that is backed by collateral such as your home or your car. This means that when you can no longer make monthly payments for your home or car, the lender may seize the collateral and sell it to recoup losses. However, when you file for a Chapter 13 bankruptcy, the lender cannot seize your house or car but will have to agree to your repayment plan. An unsecured debt is debt that is not secured by any collateral such as a credit card purchase. A creditor may seize your non-exempt property if you fail to repay what you owe.
How A Chapter 13 Helps You
A Chapter 13 bankruptcy allows homeowners that are behind on mortgage payments to save their homes from foreclosure. By filing for this bankruptcy, homeowners can catch up on the mortgage debts gradually. Another advantage of Chapter 13 is that you get to consolidate all your payments into one monthly check which you send to a trustee. The trustee will take this check and pay all your creditors.
You can also negotiate with the creditor to lower the payment amounts. Creditors are not allowed to go after a co-debtor if you have filed for bankruptcy. A Chapter 13 bankruptcy also looks better on your credit report because you repay most of the debt by filing for a Chapter 13. I you are not sure how to go about filing for a Chapter 13 bankruptcy, talk to an experienced Houston Chapter 13 bankruptcy lawyer to help you navigate the process.