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Houston Chapter 13 Bankruptcy

Filing for Chapter 13 in Houston

Under a Chapter 13 bankruptcy filing in Houston, individuals and business sole proprietors can pay off all or part of their debt by extending payments to a period of three to five years.

Reasons for considering a Houston Chapter 13 bankruptcy

Consumers and sole proprietors unable to pay bills on time may find it necessary to consider filing for bankruptcy under Chapter 13. Often, people with a moral conviction to pay their rightful debts, no matter how long it takes, will choose to file for Chapter 13 rather than Chapter 7 bankruptcy. Under Chapter 13, debts are not wiped out, but the schedule for payment is extended.

Here are some indicators that a Chapter 13 filing might be worthy of consideration:

Business has suffered or employment has been lost
A divorce, costly illness, or other financial difficulties is making it impossible to pay bills on time
Mortgages or other loans need to be brought current to avoid foreclosure
Overdue payments for taxes, child support, or student loans must be made, but cannot be made under their current schedules

Means testing

Federal bankruptcy laws provide for a means test to determine whether someone is eligible to file for a Houston Chapter 13 bankruptcy. The person filing must have a stable income with disposable income left after paying for basic requirements, such as food and utilities. There are limits on the amount of secured and unsecured debt the person filing can have.

Payment plan

When someone files for a Chapter 13 bankruptcy, the filing must be accompanied by a payment plan that outlines payment in full of all priority claims such as taxes. Claims for child support or alimony must be addressed by an agreement to commit all disposable income to a five-year repayment plan.

An appointed trustee reviews the proposed plan for accuracy and feasibility. The plan is then distributed to creditors, who have the right to object if it is unreasonable.

When a payment plan is approved, the person filing for Chapter 13 bankruptcy keeps all assets. Monthly payments are made to the trustee, who pays the creditors according to the plan. When the plan is completed as approved, remaining debts are discharged.

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