For people considering filing for Chapter 13 bankruptcy in Texas, making that decision to file will provide a solid structure for managing your payments over 3-5 years. Chapter 13 Bankruptcy in Texas is a reorganization of finances. As opposed to liquidation, and crucially, allows you to salvage your home and avoid foreclosure. It’s often referred to as a Wage Earner’s plan as it is suitable for borrowers with a steady income, allowing you to pay back debt on a monthly basis without losing your secured assets.
Steps to Filing Chapter 13 Bankruptcy in Texas
Filing for Chapter 13 Bankruptcy in Texas is a committed process and typically takes between three and six years, including the time spent gathering documents, itemizing your debts and assets and seeking advice from an attorney.
Step 1):
Seek out credit counseling. The state of Texas requires this under the 2005 Bankruptcy Act which must be done in the six months before you file.
You will need to itemize all of your assets, debts, income and outgoings; focusing on the period of two years before the date of filing. Gather together as much information as you possibly can: loan documents, tax information, mortgage and vehicle contracts, details of major payments made.
Step 2):
The next thing you’ll be required to submit is a proposed payment plan. This will outline how much you propose to pay each month towards your debts. Take your time to consider your budget for your ongoing living expenses, such as existing mortgage payments, utilities and food.
Step 3):
When you have everything you need ready, you, or your attorney, will then fill out a petition alongside the official forms which request the details of your bankruptcy. This includes the itemization of your finances over the previous two year period and your proposed payment plan. The fee for filing a Chapter 13 Bankruptcy is $310.
Step 4):
Once you have filed, creditors legally cannot pursue you for your debts. Your debts will be passed on to the court, where the courts will now have legal control over them. You’ll then be required to attend a meeting of creditors. Your trustee will organize this on your behalf, and creditors will have the opportunity to voice any concerns they have over the payment plan. This can be addressed by your attorney, or yourself if you do not have representation. These court proceedings usually only last for five minutes.
Step 5):
When your payment plan is approved by a bankruptcy judge, the only thing left to do is to ensure you meet your monthly payments.
Chapter 13 Bankruptcy Texas Trustee
Once you have filed for a chapter 13 bankruptcy you are required to begin making payments towards your approved payment plan. The court will appoint you a trustee and you make your payments directly to them. It is the trustee’s responsibility to divide up each payment and distribute a percentage of it to each creditor that you owe. They are essentially the messenger between the creditors and yourself.
Texas Chapter 13 Bankruptcy Laws
To file for a Chapter 13 Bankruptcy in Texas, you need to have a stable income, and the total sum of your secured debt must not exceed $1,184,200. Paired with an amount of unsecured debt that cannot exceed $394,725.
It is required by law to complete credit counseling within the 6 months before you file. You must also pay the filing fee of $310. Once you file, you have 14 days to submit all details of your income. So that the court can assess your ability to repay your debts with any disposable income you may have.
After your case has been approved, you must begin making your monthly payments right away. Late payments may result in your case being dismissed, so it is essential that you inform the court immediately if you experience financial difficulty during the period of your chapter 13 bankruptcy.
Requirements of Filing for Chapter 13 Bankruptcy in Texas
To file for a chapter 13 bankruptcy in Texas, you’ll need details of your income within the six months prior to the date of filing. You will also need the details of all financial transactions over the past two years, and your current living expenses.
You’ll also need to provide all debts that you owe; proof of ownership for your assets, and records of your tax returns for the past 2 years. The best course of action is to consult with an attorney who will assist you to gather together all the required documents and evidence for filing for a chapter 13 bankruptcy.
Can You Include Texas Sales Tax in a Chapter 13 Bankruptcy?
In the state of Texas, sales taxes are handled as trust funds. These debts must be paid in full and cannot be discharged. Even if you were to file for a chapter 7 bankruptcy, you would still be required to pay any sales tax owed. This means that you must include the full sum of any sales tax within your chapter 13 payment plan.
VA Disability Income in Texas and Chapter 13 Bankruptcy
If you are receiving VA disability compensation, these payments will not be taken into consideration. Any income you receive through VA disability compensation cannot be used to pay towards your chapter 13 bankruptcy debts. Furthermore, the courts will not see this compensation as disposable income. In other words, these benefits are protected and you will continue to receive them as usual.
Texas Chapter 13 Bankruptcy Minimum Income
In order to file for Chapter 13 bankruptcy, you must have enough disposable income to pay off your debts. Every case is unique, there is no set minimum income.
As a general rule, if you earn the median income for a Texas household, which is $56,565 then you are eligible to file for a chapter 13 bankruptcy. However, if you earn less than this, you may still be able to file for chapter 13 bankruptcy. In order to file you must has some type of regular income. This includes any self-employed or property income and your partner’s if you are married.
Choosing a Chapter 13 Bankruptcy Home Loan Company
After a chapter 13 bankruptcy, it might well be in your future plan to obtain a mortgage. This is far from impossible thanks to the knowledge of our mortgage consultants. We specialize in assisting clients with a bankruptcy in their past to find the right mortgage that suits their situation. Having had extensive training in this area, our advisers are well aware that you have proven yourself to be responsible in reorganizing your finances through the help of a chapter 13 bankruptcy. Get in touch today to find out how Peoples Bank Mortgage can help you open the door to your dream home.
Published (May 9th, 2018)
Author: Peoples Bank Mortgage