Chapter 13 Q & A
What is a personal Chapter 13 bankruptcy?
Chapter 13 bankruptcy is only for consumers (there is no Chapter 13 for business entities such as corporations, LLCs, etc.). A Chapter 13 bankruptcy can help if you are behind on your mortgage, a car loan, owe the IRS, and more. A Chapter 13 bankruptcy involves a repayment plan, typically 3 to 5 years in duration. Chapter 13 bankruptcy can help with a variety of issues and repayment to certain creditors (credit cards, medical bills, utility bills, auto loan repossession deficiencies, personal loans and some types of IRS debt) can range from 0% to 100% depending on your specific factual and legal circumstances.
I will be in Chapter 13 bankruptcy for 3-5 years?
This seems like a long commitment, but for some people the monthly payment in their Chapter 13 bankruptcy is less than they would normally be paying monthly on their debts. For other people Chapter 13 bankruptcy is a chance to completely pay off a car loan or to get caught up on your mortgage during that 3-5 year period.
What are the Chapter 13 bankruptcy debt limits?
If your secured debts (mortgages, auto loans, liens, etc.) total less than $1,149,525 and if your unsecured debts (credit cards, medical bills, etc.) total less than $383,175, you may be eligible for a Chapter 13 bankruptcy.
Why do I need a bankruptcy attorney to file a Chapter 13 bankruptcy?
Chapter 13 bankruptcy is complicated and includes a lot of required forms and strict deadlines. Failure to timely file forms, correctly complete forms, and meet deadlines can result in your bankruptcy being dismissed. Hiring an experienced bankruptcy lawyer in Houston will help you avoid those pitfalls.
Can I leave a creditor out of my Chapter 13 bankruptcy?
No. When you file Chapter 13 bankruptcy you are required to list all creditors. A creditor is anyone you owe or who might say you owe them. You will sign papers stating that you have listed all creditors to the best of your knowledge, including credit card companies, hospitals, doctors, student loan companies, the IRS, mortgage companies, friends, family members, etc.
No. When you file Chapter 13 bankruptcy you are required to list all of your assets. An asset is anything you own or have an interest in (cars, homes, cash, bank accounts, furniture, etc.). Intentionally omitting an asset can land you in very hot water. This even means listing things you own that may be titled in someone else’s name. For example, a car that is yours but has a title in another person’s name or a home that was inherited and is still in the deceased’s name would both need to be listed as assets.
What types of debts can a Chapter 13 bankruptcy help me with?
This is a pretty complicated question. The following is a list of common debts and is not a complete list of possible debts. In general, a Chapter 13 bankruptcy may be able to help with:
Unsecured debts. These include debts such as credit cards, medical bills, student loans, etc. Depending on your specific factual and legal circumstances these debts will be paid back anywhere from 0% to 100% of what is owed. Other than student loans, the unpaid portion of other unsecured debts will be wiped out upon successful completion of a Chapter 13 bankruptcy.
Priority debts. These debts must be paid in full and can include certain IRS debt and back child support.
Secured debts. These debts must be paid in full (except for items you are surrendering as a part of the bankruptcy or are allowed to pay outside of your bankruptcy plan). These debts can include mortgages, property taxes, HOA fees, car loans and other liens. These debts are repaid during the bankruptcy with either the contract interest rate or sometimes even a lower interest rate.
What are common reasons for filing a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy can be a tool to help with a variety of problems. After a free consultation I can tell you if a Chapter 13 bankruptcy may be able to help you based on your specific facts. Some of the more common reasons for filing a Chapter 13 bankruptcy are:
You are behind on your mortgage. Chapter 13 can help you to become current on your mortgage.
You are behind on your car note. Chapter 13 can help you pay off your car and may be able to lower your interest rate.
Your household income is too high to qualify for a Chapter 7 bankruptcy and you still need help with your credit cards.
You are struggling with debt owed to the IRS.
You have property that would not be protected in a Chapter 7 bankruptcy.
How much will my Chapter 13 bankruptcy payment be?
It depends. A Chapter 13 bankruptcy plan payment depends on household income, household expenses, your types of debts, and many other factors. Determining a Chapter 13 bankruptcy plan payment can be one of the most complicated aspects of a Chapter 13 bankruptcy. After a free office consultation we can give you an estimate as to what your payment may be.
What is lien stripping in a Chapter 13 bankruptcy?
If you have more than one lien against your house (typically liens against houses include a mortgage, a second mortgage, a home equity line of credit (‘HELOC’), property tax loans, property taxes and/or unpaid HOA fees) you may be able to wipe out one or more of the liens upon successful completion of a Chapter 13 bankruptcy. This option may be available for people who owe more on their house than the home’s current value.