Fort Worth Chapter 13 Bankruptcy Attorney

Restructuring Your Debt into Manageable Payments

About 30% of personal bankruptcies in Texas are filed under Chapter 13. Unlike Chapter 7, liquidating unexempt assets is not required in Chapter 13. Instead, debtors pay a portion of what they owe over time while keeping all their belongings.

Chapter 13 is typically used in the following situations:

• The debtor makes too much income to qualify for Chapter 7 (fails the means test).
• The debtor wants to protect assets that would have to be sold under Chapter 7.
• The debtor wants to get caught up on the mortgage, equity loans, and other payments that couldn’t be discharged under Chapter 7.

Once you file for bankruptcy, an automatic stay goes into effect. All creditors must cease any collection efforts. The phone calls, emails, and letters will stop. If they do not, they are violating federal law.

Qualifying for Chapter 13 in Fort Worth

Not everyone qualifies for Chapter 13. The individual must have a regular income with less than $465,275 in unsecured debt and $1,395,875 in secured debt (effective for filings between April 1, 2022, and March 31, 2025). Secured debts are backed by property that is pledged as collateral. Unsecured debts are not backed by collateral.

Other eligibility requirements include the following:

• The debtor is employed
• The debtor has enough income to cover monthly payments
• The debtor is up to date on tax filings for the previous four years
• The debtor is an individual, not a business (although the individual can own a business)

If the person filing for Chapter 13 is married, the income and expenses of their spouse are also given to the court. Even if they are not jointly filing for bankruptcy, the court needs this information to evaluate the household’s financial status.

The following list illustrates sources of income you can use to fund your repayment plan:

• Salary or regular wages
• Income from gigs and part-time work
• Commissions and bonuses
• Child support
• Alimony
• Pension payments
• Social Security benefits

Repaying Debt in a 3-to-5-Year Plan

All income, expenses, creditors, assets, and other financial information are disclosed in your bankruptcy filing. Within 14 days of the filing, the debtor proposes a repayment plan to the court. Payments are typically paid biweekly or monthly.

The plan must pay priority debt in full unless the creditor agrees to a lesser amount. Priority claims include the following:

• Child support obligations
• Spousal support obligations
• Taxes owed to the government
• Injury or death claims caused by an alcohol or drug-related motor vehicle or boat accident

Unsecured nonpriority claims do not need to be paid in full if the creditor receives as much as they would have received if the debtor’s assets were liquidated under Chapter 7.

If the court does not confirm the proposed plan, the debtor may submit a modified plan for consideration. Whether the plan should be 3 or 5 years depends on the debtor’s monthly income and the time needed to pay the required amount. Those earning less than the state’s median income usually adhere to a 3-year plan. The plan will last 5 years if the debtor makes above the state’s median income.

There are situations where someone who qualifies for the 3-year plan would still choose a payment plan that lasts for five years. Our Fort Worth bankruptcy attorneys can evaluate what is best in your specific case.

Discharge in Chapter 13

The remaining balance of any qualifying debt is discharged – erased – after the successful completion of the repayment plan.

Nonpriority unsecured debts discharged under Chapter 13 include the following:

• Credit card balances
• Medical bills
• Personal loans
• Utility bills

If circumstances change leaving the debtor unable to complete the repayment plan, they can ask the court for a “hardship discharge.” This type of discharge is generally only approved if the circumstances are beyond the debtor’s control and through no fault of their own. This discharge is also only granted when the creditor has received as much as they would have in a Chapter 7 bankruptcy and modifying the plan is not possible.

Bankruptcy Does Not Define the Person

At the Law Offices of Mark M. Childress, we treat all our clients with respect and compassion. Being underwater financially is not where anyone wants to be. If you are being harassed by creditors, you do have rights. We will help you evaluate your options so you can make an informed decision about whether bankruptcy is the right solution.

Contact us today to discuss your bankruptcy options. Call (817) 497-8148 to schedule a consultation. We serve the counties of Tarrant, Parker, Johnson, Wise, Hood, Denton, Somervell, and Jack.