For individuals who are dealing with debts that they cannot pay, federal law offers a way to regain financial control through bankruptcy. One of the most common types of bankruptcy for individuals is a filing under Chapter 13. In this type of bankruptcy, certain debts will be discharged, meaning the debtor is no longer legally required to pay them. For other types of debts, the court will order the filer to follow a repayment plan.
If you have questions about what a Fort Worth Chapter 13 bankruptcy repayment plan would look like for you, our Chapter 13 bankruptcy attorneys at Allmand Law Firm could help. We could help you decide if Chapter 13 bankruptcy is right for you and help you understand what to expect when it comes to repayment.
What Is Chapter 13 Bankruptcy?
Chapter 13 is a unique kind of bankruptcy that allows a person who can pay at least some of their debts to keep most of their assets. If a person can show that they have some form of regular income, the court will allow them to develop a plan to repay some of their debts, typically over a period of three to five years, depending on the circumstances of each case. During the Chapter 13 bankruptcy repayment period in Fort Worth, creditors may not begin or continue collection efforts or seize the debtor’s assets.
This type of plan is attractive to people in debt who have jobs, but who are otherwise at risk of losing significant assets like their vehicles or home because they are behind on payments. As long as they are able to stick to the repayment plan, their assets will be safe from creditors.
Chapter 13 is not for everyone. First, the debtor must show proof of income, so if a person is unemployed or underemployed, they may not have sufficient income to qualify. Second, the debtor’s unsecured debts must be less than $526,700 and their secured debts must be less than $1,580,125 at the time of filing. Please note that these debt limits are adjusted every three years, so the applicable amounts may change over time. Additionally, a person cannot have had a previously filed bankruptcy petition dismissed for a failure to appear during the preceding 180 days. They must also have sought credit counseling during that same time period.
What Is a Chapter 13 Bankruptcy Repayment Plan Like?
Typically, unless the court grants an extension, the Fort Worth debtor will file a repayment plan with the Chapter 13 bankruptcy petition or within 14 days of filing. Payments will be made to a bankruptcy trustee instead of to individual creditors, and the trustee will distribute the appropriate funds. Depending on the circumstances of each case, the creditors may not receive full repayment. The plan will also specify what amount must be paid to the bankruptcy trustee and how often the payments will be made, typically every two weeks or once a month.
When developing the payment plan, there are three main types of claims: priority, secured, and unsecured claims. Priority claims include taxes and the costs associated with the bankruptcy proceeding. Secured claims like mortgages involve collateral that the creditor can seize if they are not paid. Unsecured claims are those in which the creditors have no special rights. An attorney could help debtors develop a repayment plan in accordance with each creditor’s status.
Contact Us For Help With Your Chapter 13 Bankruptcy Repayment Plan in Fort Worth
Declaring bankruptcy can feel like a defeat, but for many individuals, Chapter 13 bankruptcy actually offers a hopeful path toward a better financial future. If you are considering filing for Chapter 13, our attorneys at Allmand Law Firm could advise you from start to finish and help you create a realistic and achievable Fort Worth Chapter 13 bankruptcy repayment plan. Contact us today to learn more.
