Texas Bankruptcy - Chapter 13

Filing Texas bankruptcy under Chapter 13 provides individuals with an opportunity to reorganize debts. Longer payouts, discounted payouts, and discharges of debts with court protection are available. Many code provisions apply to all chapters, while 11 U.S.C. Sec. 1301 applies only to Chapter 13.

Chapter 13 is designed to allow financially distressed individuals who file Texas bankruptcy to invoke a cloak of protection provided by the courts. Under court supervisions, assets are protected, and a proposed plan must be filed that provides for payment of all or part of debts owed. Following confirmation, a trustee collects monthly payments, deducts a fee for services provided, disburses payments to creditors, and provides a periodic accounting to the court. All laws applicable to Texas bankruptcy are currently under review by the U.S. Congress, especially payment amounts required in Chapter 13. Reform bills specifically target Texas bankruptcy by placing a mandatory limit on all state homestead exemptions, and limit allowable living expenses to a standard adopted from the IRS which applies to criminals charged with tax evasion.

Texas Bankruptcy Plans

Chapter 13 is designed for individuals with regular income. The term "wage earner" is derived from this requirement and is still in use today for Texas bankruptcy under Ch. 13. These plans are ideally suited for employees who desire court protection from creditors and are also permissible for sole proprietors who satisfy the "regular income" requirements of the Code. Plans may provide either full or partial payment of debts, with discharge of remaining balances, if any, upon completing all payments. Plan terms are available for Texas bankruptcy cases ranging from 3 to 5 years. A plan lasting more than three years must be approved by the court "for cause." All Chapter 13 plans are limited to a maximum of 5 years. 11 U.S.C. 1322(d).

Individuals, including self-employed owners of sole proprietorships, are authorized to file Chapter 13 if owing less than $269,250 in unsecured debts, and less than $807,750 in secured debts. 11 U.S.C. 109(e).

For best results, debtors must carefully plan the selection of chapter, date of filing, and options. All options are not available to all debtors because of variation in financial histories, assets owned, and new income restrictions. Because of the complex nature of recent changes in federal law, the assistance of a qualified attorney or law firm is essential. With assistance, effective debt relief is readily available through the bankruptcy courts.

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