An Individual’s Plan for Repayment & Reorganization
Dripping Springs Attorney R. Brian Daniel
Many people find themselves overwhelmed by debt, often due to circumstances beyond their control. A Chapter 13 bankruptcy can provide relief for unmanageable debt and is the best choice in most situations where a person has sufficient disposable income to partially repay his or her creditors over time and does not want to lose assets. Chapter 13 is also a good option if your income is too high to even qualify for a Chapter 7 bankruptcy filing; however, there are debt limitations and eligibility restrictions to consider with Chapter 13. Due to federal bankruptcy law changes in recent years, it is best to contact a skilled Austin Bankruptcy Attorney for advice before taking any action.
Chapter 13, allows individuals who are in debt and have regular income to develop a debt repayment plan while allowing them to keep most or all of their property. Also known as a “reorganization bankruptcy”, Chapter 13 is an often utilized form of personal bankruptcy. This type of bankruptcy can be used to repay a portion of one’s secured or unsecured debts, unlike Chapter 7.
In order to file for bankruptcy under Chapter 13, individuals must first receive debt management counseling from an organization approved by the U.S. Bankruptcy Court. A plan is then established so that debtors can repay some or all of the debt owed to creditors. Certain debts take priority over others, including back taxes, child support, and spousal maintenance (alimony). Regular payments for secured debts, such as auto and mortgage loans, must be also factored into the debtor’s budget along with any arrearages on secured debt or other priority debt (taxes). Any income leftover after covering normal and reasonable monthly expenses (food, utilities, mortgage, auto payments, gas, etc.) must be applied toward the repayment of unsecured debts such as credit card bills.
The repayment period for a Chapter 13 bankruptcy will range from three to five years, depending upon the total amount of debt owed and the level of the debtor’s income. Any debts remaining after the payment period has ended are discharged, meaning the debtor is no longer liable for any still unpaid portions of their debt. Then, before the remaining debts can be discharged and the case can be closed, individuals must show proof that they have completed a mandatory program in personal finance. An experienced and skilled Dripping Springs Bankruptcy Attorney can help achieve these results and ensure that your discharge is entered.
There are some important limitations and restrictions associated with a Chapter 13 bankruptcy filing. Businesses may not file under Chapter 13 in the name of their business; however, business owners may file as individuals under this chapter and include business-related debts for which they are personally responsible. To be eligible for Chapter 13, you must show proof to the bankruptcy court that you have sufficient disposable income, after subtracting certain necessary expenses, to repay your debts. There are also maximum debt limits for filing under this chapter. Currently, secured debts such as mortgages and car loans may not exceed $1,081,400. In addition, unsecured debts including credit card, utility, and medical bills may not exceed $360,475.
Determining whether to file for bankruptcy protection and, if so, which Chapter best matches your current needs can be very complex. If you are considering bankruptcy due to unmanageable debt, you should talk to a qualified Dripping Springs Bankruptcy Lawyer to find out which of your debts might be available for a discharge.
An experienced Dripping Springs Bankruptcy Lawyer can also help you determine whether you are eligible to file for bankruptcy protection and, if so, which chapter best suits your specific set of circumstances. If you are considering bankruptcy protection, it is important to get solid legal advice before moving forward, so please reach out to The Daniel Law Firm. We take great pride in serving clients all over Central Texas. Let us discuss the best strategy for moving your Bankruptcy case forward in both a positive direction and timely manner. Contact an Dripping Springs Bankruptcy Attorney at The Daniel Law Firm today at (512) 615-3569.