Houston Chapter 13 Bankruptcy Attorney
How does Chapter 13 work?
Debtors in Chapter 13 keep all of their property, whether or not it is exempt, but they make regular payments on their debts out of the money that they earn after filing the bankruptcy case. These payments must be at least as much as would have been paid to creditors in a Chapter 7 case. The payments are made to a trustee who distributes the payments to the creditors. The payments are made in regular installments according to a Chapter 13 plan that our attorneys prepare on your behalf. The plan’s duration may range from a three to five year period and can be paid in full before the plan’s duration ends. After a plan is paid in full, clients receive a Chapter 13 discharge. Some kinds of debts that are not discharged in Chapter 7 cases for example, debts arising from fraudulent use of a credit card, may be discharged in Chapter 13. Please consult with our bankruptcy attorneys to understand which debts are and are not dischargeable in a Chapter 13 case.
If a debtor is behind in house or car payments, can Chapter 13 stop a foreclosure or repossession from taking place?
Yes. Unlike Chapter 7, where the debtor can usually stop a foreclosure or repossession only if the Creditor agrees to a reaffirmation, a debtor in Chapter 13 can provide for car and mortgage payments in the Chapter 13 plan, and the creditor can be required to accept these payments instead of proceeding with foreclosure or repossession. This is the cornerstone benefit of a Chapter 13 plan.
Who can file a Chapter 13 case?
A Chapter 13 case can be filed by most consumer debtors. There are two principal requirements. First, the debtor must have regular income. Income is not limited to regular hourly wages and may include rental income or the sale of real estate. Second, the debtor must not have excessive debt. Chapter 13 is available only to debtors who do not owe more than $1,010,650 in secured debt (like home mortgages and auto loans), and more than $336,900 in unsecured debt (like most credit card debt).
What does my bankruptcy attorney do in Chapter 13 case?
A lot of work goes on in preparing a Chapter 13 case. During the process of a Chapter 13 case a bankruptcy attorney will due many things on your behalf. The following is not a conclusive list and does not include all that our attorneys do for our Chapter 13 clients. Our attorneys will help evaluate your financial situation and determine whether Chapter 13 is an option for you; give you necessary information in completing your required credit counseling class; evaluate your budget and debts in order to maximize the benefits of a Chapter 13 plan; prepare your Chapter 13 plan; and file all necessary papers with the Court. However, this is only work performed pre-petition. After your case is filed your attorney will attend the mandatory creditors meeting with you, work to ensure that your plan is acceptable and confirmed; ensure that proper creditor claims are filed in your case and object to any improper claims filed; be there for you during the term of your plan in case any changed circumstances; and assist you in obtaining a discharge.
What is my Chapter 13 plan payment?
A Chapter 13 plan payment consists of your disposable income. Your attorney will assist you in determining what amount of money you may be able to dedicate to a Chapter 13 plan. This plan payment will go towards any secured, priority, and unsecured debts that you have listed in your plan. Typically clients enter into a wage withholding order to allow the Trustee to take automatic drafts out of a bank account. In districts where electronic wage withholding is not mandatory, clients are still given the option to mail cashier’s checks or money orders directly to the Trustee. Personal checks will not be accepted.
When do I make my first Chapter 13 plan payment?
Your first Chapter 13 payment is due and owing to the Trustee 30 days after your case is filed. Your initial payment is the first step for you to demonstrate that your plan is feasible. Your first payment does not bind your creditors to the terms of your plan. Your plan will become final upon approval at confirmation.
What is a Chapter 13 confirmation?
Confirmation is court approval of your plan. The Trustee and creditors are given an opportunity to review your plan and ensure that it meets several required legal standards. If the plan does not pass the standards due to an objection, then your attorney will work with you on making necessary changes in the plan. If your plan does meet all the required legal standards or does not draw an objection, then the Trustee will recommend your plan for confirmation and the Court may approve.
What can be done if a debtor falls behind in payments after filing a Chapter 13 case?
If a life event or other unforeseen changed circumstances occur or you encounter the need to incur new debts during your Chapter 13 plan, our attorneys will be able to assist you in obtaining the necessary changes. Events such as moving to a new home or apartment, having additional children, and the need to buy a new car have an impact on your Chapter 13 plan.
It is often possible to deal with life events and changed circumstances by amending the Chapter 13 plan. Also, it is sometimes possible to add to the plan debts that were incurred after the Chapter 13 case was filed so that they will be discharged with other debts at the completion of the plan. As experienced bankruptcy attorneys the Maida Law Firm will be able to assist you during the term of your plan.
Does a Chapter 13 discharge prevent me from filing a second bankruptcy?
Even after the plan is completed and the debtor receives a discharge in Chapter 13, if unexpected circumstances arise that again make it impossible for the debtor to deal with new bills, the debtor may be able to file another bankruptcy case.
If you get a Chapter 13 discharge, you cannot get a discharge under Chapter 7 for six years. You also cannot get a discharge under Chapter 13 for a period of four years after you obtained a discharge under Chapter 7 or two years after you obtained a discharge under Chapter 13.
I am behind in my child support, is this a problem?
Under BAPCPA, debtors must be current with all present Domestic Support Obligations. Otherwise, their Chapter 13 case will be dismissed, leaving the debtor stuck not only with Domestic Support Obligations but also with all other creditors' claims. State courts will enforce wage deductions of 15% for creditors' claims and also whatever support obligations have been ordered by the divorce court. A debtor then could easily find more than 50% of his or her disposable income forcibly deducted from each paycheck.
You must maintain all Domestic Support Obligations, whether to your children or your ex-spouse, current to be eligible for Chapter 13 relief. You cannot, in any event, modify, change, or otherwise affect your Domestic Support Obligations in bankruptcy court. Any relief which you may need because of your changed circumstances must be ordered by the divorce court. It is possible to pay "past" due domestic support obligations through a Chapter 13 plan of reorganization.
Contact the bankruptcy attorneys at the Maida Law Firm for a free consultation. Contact us online or call us in our Houston office at (713) 987-3910 or in Beaumont at (409) 291-5117.
