Chapter 13 Process
The bankruptcy process is tedious. You will have to disclose a thorough evaluation of your finances, devise a plan to pay back creditors and attend various hearings. One small mistake or forgotten piece of information and your case could be dismissed.
The thought of filing for bankruptcy is stressful enough on its own, so you can only imagine how stressful the proceeding can be. Rather than dealing with this stress, let an attorney carry the burden for you.
Bankruptcy Attorney in Dallas County
Do not rely on the internet to provide you with enough information to file for bankruptcy on your own. There is more to the process than filing paperwork and paying back creditors. Littlefield Law Firm will make sure you are up to date throughout the process and fight for the financial freedom you deserve.
Calling Littlefield Law Firm should be the first step in the bankruptcy process. Linda Littlefield will sit down with you and help you decide if Chapter 13 is right for your situation. We serve clients in Dallas County, Collin County, Rockwall County and Kaufman County.
- Credit Counseling
- The Chapter 13 Repayment Plan
- Filing for Chapter 13 Bankruptcy in Texas
- Meeting of Creditors and Confirmation Hearing
- When Will My Debts be Discharged?
- Additional Resources
Anyone who plans to file for bankruptcy must complete a pre-bankruptcy credit counseling course. This requirement was added back in 2005 when the United States Government refurbished the country’s bankruptcy laws. You will not be able to file for Chapter 13 bankruptcy without completing this course.
Completing credit counseling is fairly straightforward. You will have to pay a small fee and enroll in a 60 to 90-minute counseling session. The U.S. Trustee Program has approved hundreds of counseling programs in Texas. While most counseling sessions are offered online, they can also be completed in person or over the phone.
During credit counseling, you will get an idea of whether bankruptcy is right for your financial situation. The counseling agency will typically prepare a repayment budget based on your income and expenses. You are not required to follow the agencies repayment proposal, but you are required to file it along with other bankruptcy documents.
Credit counseling is the first step in the Chapter 13 bankruptcy process, but there are situations where the course is not required. Keep in mind, though, these exceptions only apply in very specific situations. These situations include:
- Bankruptcy was filed immediately to avoid immediate, substantial harm. Pre-counseling will still be required within 30 days of filing.
- A debtor is incapacitated, has a disability or on active military duty
- The U.S. Trustee Program found there are no approved courses available in your area. This is rare since most sessions are completed online or over the phone.
The Chapter 13 Repayment Plan
Setting Chapter 7 and Chapter 13 apart is the repayment plan. Debtors who embark on the Chapter 13 process will be required to make reduced payments to creditors over three to five years. The means test is used to determine your monthly payments, the length of the plan and whether you make enough disposable income to pay back creditors.
The first step in determining payments is figuring out how your annual income compares to the median income in Texas. The median income in Texas is based on the number of members in your household. The more non-dependent members in your home, the greater your income is expected to be. According to the United States Department of Justice, the median income for Texas households include the following:
- 1 Person: $47,238
- 2 Persons: $63,148
- 3 Persons: $69,294
- 4 Persons: $78,572
- 5 Persons: $86,972
A payment plan will typically last five years if you make above the median income. If you make less, however, you will have to make repayments for three years, but only if you have enough disposable income. Disposable income is determined by deducting certain expenses from your annual income. You can deduct expenses such as housing costs, food and vehicle operation expenses, but they must follow IRS standards.
Determining the exact amount of a monthly payment is not an easy process. The formula will take into account your monthly income, expenses, debts, assets and the length of your plan. A rough estimate can be determined by using a simple formula, where income after expenses and exceptions are paid to the trustee and the trustee will then distribute to the creditors based on priority.
Filing for Chapter 13 Bankruptcy in Texas
You will be able to submit a bankruptcy petition and other forms once it’s determined you are eligible for Chapter 13 bankruptcy. You will need to file various legal forms to initiate the proceedings, so it’s advised you do so under the guidance of a bankruptcy attorney.
The automatic stay will take effect once the petition is filed with the bankruptcy court. This automatic junction will halt all actions by creditors and collection agencies, granting you peace during bankruptcy proceedings. Any harassing creditor calls or appearances are a violation of federal law, so alert your attorney if debt collectors are still making contact during bankruptcy proceedings.
Within a few days after filing the petition, a trustee will be appointed to your case. A trustee plays a major role in bankruptcy proceedings. This individual is responsible for reviewing your bankruptcy paperwork, collecting payments and carrying out the terms of the Chapter 13 repayment plan.
Meeting of Creditors and Confirmation Hearing
After you have filed for bankruptcy, you will be required to attend a mandatory 341 meeting, also called a meeting of creditors. This short hearing allows the appointed trustee and creditors to ask you questions about your bankruptcy papers and verify the information you provided.
This meeting is less formal than a standard hearing. There will be no judge present and the processing will likely take place in a conference room rather than a courtroom. It is common for a trustee to schedule other bankruptcy proceedings the same time as yours, so other debtors will likely be present.
A trustee will likely object to your petition and file a motion to dismiss if they believe you should be paying more to creditors. If this happens, you and your attorney will need to prove why your plan should be approved or correct the issues to satisfy the trustee.
Following your meeting with creditors, you or your attorney will need to attend a confirmation hearing. During this meeting, the court will address any objections from the trustee or creditor and decide if your repayment plan should be approved.
When Will My Debts be Discharged?
You will receive discharge once you pay back a certain amount of debt through a three- or five-year repayment plan. Once you have made all necessary payments, any remaining qualifying debts will be wiped out, and creditors can no longer contact you to collect payments.
Most remaining debts will be discharged when a payment plan expires, with the exception of debts such as student loans and child support payments. The majority of discharged debts are unsecured but remaining secured and priority debts may be wiped out as well. The majority of debts discharged in Chapter 13 bankruptcy are unsecured debts, but other debts may be wiped out as well. Debts that may qualify for Chapter 13 discharge include:
- Credit card balances
- Medical bills
- Personal loans not secured by collateral
- Overdue utility payments
- Older tax debts
- Debts from breach of contract
- Debts from willful and malicious property damage
- Certain debts from divorce or property division settlements
Chapter 13 Basics | United States Courts – Learn more about Chapter 13 bankruptcy by following the link. You can learn about the advantages of the debt relief, how the process works and how to make a payment plan work. The information can be read on the official website of the United States Courts.
The Plan | Bankruptcy Code – Follow the link provided to read the section of the Bankruptcy Code governing the repayment plan. You can find out what needs to be included in the plan, when payments need to be made and learn more about Chapter 13 discharge. The statute can be read on the Legal Information Institute, an online legal resource provided by Cornell Law School.
Bankruptcy Lawyer in Dallas, TX
Consulting with a bankruptcy attorney is the first, most crucial step of the Chapter 13 process. Littlefield Law Firm is completely devoted to bankruptcy law. For nearly 25 years, Linda Littlefield has been helping consumers and small business with Chapter 13 bankruptcy. She will guide you through the complicated bankruptcy proceedings and make sure all the necessary steps are taken to ensure a successful case.
Call (972) 812-0900 to schedule a time to speak with Littlefield Law Firm. We assist clients in areas such as Dallas, Plano, Heath and Talty.