How Does Chapter 13 Bankruptcy Work in Texas?

 Posted on December 21, 2023 in Chapter 13

When debts snowball beyond control, Chapter 13 bankruptcy restructures finances, offering three to five-year repayment plans capped at what you can afford. This path preserves assets while discharging remaining balances upon completion. A Texas bankruptcy lawyer can help you structure the most ideal process for your situation.

Filing the Petition

Everything begins by submitting your voluntary Chapter 13 bankruptcy petition to the bankruptcy court, documenting assets, debts, income, and expenses. This triggers an automatic stay halting foreclosure, repossessions, utility shut-offs, wage garnishment, and most collection harassment during proceedings. You keep property like cars and homes while the case wraps up.

Creating Your Repayment Plan

Next, you propose a repayment plan tailored to disposable income levels, assisted by your attorney. This lays out affordable monthly installments toward outstanding debts like credit cards, medical bills, personal loans, and past taxes. Payments are distributed to each creditor until the respective principal balances are reached, or the payments are completed—whichever happens first.

Obtaining Court Confirmation

The appointed bankruptcy trustee examines your repayment proposal to ensure it distributes the maximum realistic amount to creditors, given your complete financial situation. The trustee may request revisions before presenting the plan for judge approval. Once court-confirmed, your trustee oversees payment processing from wages or bank drafts until satisfied per terms.

Paying Along Until Discharge

Now you begin making consistent monthly bankruptcy plan payments over the next three to five years while sticking to an austere budget. Any steps taken to reduce expenses or reasonably boost income responsibly help ensure fulfilling the obligation in good faith. Provided continuing plan compliance, the court then discharges all remaining unmet principal debt balances owed once the final payment is reached.

What Happens If I Default on The Repayment Plan?

Failure to make ongoing Chapter 13 payments as mandated by the court risks getting your bankruptcy case dismissed without any debt relief. Worse, some discharged balances revert back to lenders for renewed collection activities. Hence, strict budgeting diligence remains vital so your efforts are not wasted. An attorney can propose amended plans addressing emergencies that temporarily impair meeting payment responsibilities.

Contact a San Antonio, TX Bankruptcy Lawyer

 Chapter 13 bankruptcy delivers structured debt repayment without forfeiting everything you own. You deserve to gain financial peace without all of the worries. Work with a Boerne, TX bankruptcy attorney to see what may be the best option for you. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.