Chapter 13 bankruptcy can give overextended wage earners an opportunity to manage debts without risking a loss of homes and other property. The end result of a Chapter 13 filing is typically a three to five-year plan structured to repay all or a portion of a resident’s outstanding debts.
Chapter 13 bankruptcy repayment plans generally require full repayment of primary debts. Given this, primary debt in Chapter 13 bankruptcy in Fort Worth is a significant component of a repayment plan. Chapter 13 bankruptcy attorney Reed Allmand, who is double board-certified in Consumer Bankruptcy by the Texas Board of Legal Specialization and the American Board of Certification, focuses on developing Chapter 13 plans that best manage these debts.
What is Considered to Be a Primary Debt?
Primary debts are not discharged by a Chapter 13 bankruptcy filing in Fort Worth or anywhere else in Texas. These debts are generally given a priority or reflect secured lending, and as such, they are repaid over general unsecured loans such as debt incurred with revolving credit cards.
Primary debts specifically include:
- Tax debts recently incurred by the debtor
- Domestic obligations, such as child support or alimony
- Student loans from federally-insured or private lenders
- Debts resulting from fraudulent activities
- Court-ordered restitution and legally imposed fines
- The administrative costs of a Chapter 13 bankruptcy filing
- Payment obligations that are left off of the filing
To learn more about what qualifies as a primary debt, contact Allmand Law Firm.
If Primary Debts Must Be Repaid, What is the Advantage of a Chapter 13 Filing?
A majority of Fort Worth Chapter 13 bankruptcy filers have regular income and resources to make payments, but their debt obligations have simply become overwhelming and unmanageable to the point where they are making minimum payments, and the principal balances of primary debts are not going down. A Chapter 13 filing places a temporary hold on collection efforts by creditors and gives filers a chance to catch their breath while their bankruptcy attorney and the courts devise an orderly and structured repayment plan for those debts.
When the court approves the plan and creditors accept it, the debtor then makes a single monthly payment to a bankruptcy trustee, who then distributes those funds to the creditors. This process, which occurs over three to five years, assures a steady reduction of loan principal balances to primary debt creditors while leaving the debtor with sufficient funds to pay ongoing living costs and expenses. With regular monthly payments, the debtor then has an opportunity to rebuild their financial well-being and to recover their creditworthiness. Unlike Chapter 7 bankruptcies, a Chapter 13 plan does not force the debtor to sell their home or to liquidate assets.
Can You Take On New Primary Debt After a Chapter 13 Filing?
Restrictions on future financial activities are common in Chapter 13 bankruptcy repayment plans in Fort Worth, which will generally limit your right and opportunity to:
- Apply for and receive new loans for additional primary debt without court approval
- Transfer assets or sell property, which a court may perceive as an attempt to commit fraud if you move assets without court approval
- Withhold critical information about your finances, which can also be viewed as fraud
- Skip payments that are ordered as part of your Chapter 13 primary debt repayment plan
A lawyer at our firm can explain the potential consequences of a repayment plan during a consultation.
Call Us To Learn More About Primary Debt in Fort Worth Chapter 13 Bankruptcy Cases
Reed Allmand, founder of the Allmand Law Firm, can give you the advice and counsel you need to make intelligent decisions about managing your primary debt in Chapter 13 bankruptcy in Fort Worth. Please call us today to schedule a consultation to determine if a Chapter 13 bankruptcy filing is your best option to restructure your primary debt obligations.
