Dallas Chapter 13 Bankruptcy Attorneys
Helping Texas Clients Work Toward a Fresh Financial Start
Even if you have steady income and are smart about your spending, debt can still take over your life. Unexpected costs, unplanned medical treatments, and other factors can quickly snowball into an exorbitant level of debt you cannot hope to repay, even if you are still employed.
Chapter 13 bankruptcy can help Texans retake control of their lives by restructuring their debts into reasonable, manageable chunks. The process assesses your outstanding debts and weighs it against your current ability to repay, resulting in a court-approved repayment plan that can put you on the road to financial recovery. If you faithfully complete the terms of your repayment plan, you are typically given the opportunity to discharge any remaining unsecured debt.
The process of filing for any type of bankruptcy can be overwhelming, especially if you are not familiar with the legal or financial jargon involved. At The Law Office of Truman E. Coe, P.C., our Chapter 13 lawyers in Dallas can guide you through each step of filing for Chapter 13 bankruptcy and work to obtain you the most advantageous outcome possible. Our team has over 40 years of combined legal experience and is committed to helping our clients seek freedom from debt.
Do I Qualify for Chapter 13 Bankruptcy?
If you will likely only qualify for either Chapter 7 or Chapter 13 bankruptcy as an individual. Many will first check to see which they qualify for through the Texas Means Test. Those who do not qualify for Chapter 7 often consider filing Chapter 13, which offers its own slate of benefits.
If you currently make more than the average median income for your household in the state of Texas, you most likely qualify for Chapter 13 bankruptcy. To be certain, you can subtract qualifying expenses from your average monthly income to calculate your monthly disposable income. If there is a sufficient amount to at least partially repay creditors, a bankruptcy court will likely agree you qualify for Chapter 13 bankruptcy.
In addition, you will need to complete a qualifying credit counseling course before formally filing for bankruptcy. Our Dallas Chapter 13 bankruptcy attorneys can assist with facilitating this requirement.
Finally, you will need to demonstrate that your total debt does not exceed the eligibility thresholds. The bankruptcy code sets debt ceilings across secured and unsecured debt to prevent abuse.
As of September 2020, the following must be true if you want to file Chapter 13 bankruptcy:
- Your total unsecured debut must not exceed $419,275
- Your total secured debt must not exceed $1,257,850
Secured debt includes any type of debt that is “secured” by collateral. This can include vehicle loans, mortgages, and most student debt. Unsecured debt encapsulates any type of loan that does not have collateral and is secured only on credit. This typically includes credit debt, medical bills, and personal loans.
How Does the Chapter 13 Bankruptcy Process Work?
If you have determined you have reasonable income to facilitate a repayment plan and meet Chapter 13 bankruptcy’s other requirements, it is time to formally file with your judicial district’s bankruptcy court. The court will promptly institute an “automatic stay” upon receiving your filing. This court order prevents any collection actions from continuing against you, including creditor harassment, vehicle repossessions, and foreclosures. As a result, the mere act of filing for Chapter 13 bankruptcy can keep you from losing your house or car.
Once the bankruptcy court has your petition, they will conduct a thorough review of the financial records included with your filing. This will include their own calculations of what they believe your level of disposable income is.
Remember, disposable income is calculated by taking your average monthly income and subtracting qualifying expenses. This encapsulates any expenditure required for you to reasonably live your life.
Qualifying expenses you can deduct to calculate disposable income include:
- Involuntary payroll deductions
- Court-ordered payments, such as child support or alimony
- Childcare expenses
- Medical expenses
- Housing and utilities, including rent or mortgage payments
- Food and sustenance
- Life insurance premiums
- Transportation and related costs, including vehicle loan payments or fare needed to get to work
We can evaluate your current financial situation and help determine which of your monthly expenses qualify to count against your total disposable income. Keep in mind that your choices will be heavily scrutinized, and you will not be permitted to deduct costs attributed to more “luxurious” lifestyles. Payments on a second vehicle, for example, will probably not be honored as a qualifying expense.
What Does the Chapter 13 Repayment Plan Look Like?
After the bankruptcy court has determined your level of monthly disposable income, they will consult with your creditors and your legal representation and establish a repayment plan. This plan effectively restructures your debt into a single lump sum that you will be ordered to repay over a period of 3 to 5 years.
The monthly amount is calculated based on your ability to pay, not on the total size of your debt. In other words, you will in most circumstances end up repaying substantially less than what you originally owed.
So long as you continue to make the payments laid out in your plan, you will continue to enjoy the benefits of Chapter 13 bankruptcy. This includes the automatic stay continues for the length of your bankruptcy, a period of multiple years: Creditors will not be able to contact you, your home cannot be foreclosed, and your vehicle cannot be repossessed. This gives you crucial time to restructure your finances and catch up on late payments.
You also completely avoid the liquidation process inherent to Chapter 7 bankruptcy. Unlike Chapter 7, you will not place any property in the care of a trustee and will not have to liquidate any assets to repay creditors.
If you complete the full terms of your Chapter 13 bankruptcy plan to the satisfaction of the bankruptcy court, you will be permitted to discharge your unsecured debts. Before this final step occurs, you will have to complete a court-approved debt management course to establish your seriousness about avoiding bankruptcy in the future.
Unsecured debt you can typically discharge at the conclusion of a Chapter 13 bankruptcy includes:
- Credit card debt
- Medical bills
- Personal loans
- Past due utility bills
- Collection agency accounts
Note that you cannot discharge secured debts, which is anything tied to collateral. This includes a mortgage on your home or lease on your car. Keep in mind that Chapter 13 is meant to give you time to reorganize your finances: Though you cannot discharge a mortgage, for example, you will have several years to fulfill missed payments and will have more financial resources that do not have to be devoted to unsecured debts.
Let Us Be Your Partner in Chapter 13
Facing debt you cannot reasonably keep up with is never a pleasant experience, and the act of filing for bankruptcy might feel too scary to consider. Our Chapter 13 attorneys in Dallas at The Law Office of Truman E. Coe, P.C. can help you understand the benefits of the process and work to leverage its tools to give you the best possible outcome. We can help you fill out your forms, gather the necessary documents, and file your bankruptcy. Our team can also evaluate the full scope of your financial situation to ensure filing for bankruptcy will help you effectively restructure your debt. Our firm emphasizes individualized attention and will give your case the respect and compassion it deserves.