Can you file Chapter 13 Bankruptcy?
If you live in Austin, Houston, San Antonio, or Dallas, and are interested in filing for Chapter 13 Bankruptcy, contact The Law Offices Of R.J.Atkinson,LLC for a free initial consultation and a free bankruptcy means test to see if you are eligible to file for Chapter 13 Bankruptcy. We would like to help you to obtain a fresh start.
Many people in Texas choose to file for Chapter 13 Bankruptcy to stop foreclosure, stop repossession, repay past due child support, or back taxes. Sometimes, people file a Chapter 13 to stop a lawsuit, stop creditor harassment, or to just reduce overwhelming debt and obtain a fresh financial start. Chapter 13 Bankruptcy may significantly reduce credit card debt and other unsecured debt when a Chapter 7 Bankruptcy is not an option.
Filing a Chapter 13 Bankruptcy is often a good option for many people facing foreclosure, repossession, or other temporary financial hardship. But no matter what the reason is for filing Chapter 13 Bankruptcy, you have to first be eligible. Not every individual is eligible to file for Chapter 13 but, many people in Texas are. Despite what you may have heard in the media about the changes in bankruptcy law, most people in Texas who need bankruptcy protection are still eligible. As a matter of fact, most people who consider filing for Chapter 13 as opposed to Chapter 7 are eligible if they have sufficient disposable income.
Since Chapter 13 Bankruptcy is a repayment plan, the primary eligibility requirement is the additional money needed to fund the repayment plan. There are other requirements but the most basic eligibility requirement is the ability to fund a repayment plan over 3 to 5 years. Income from almost any legal source can be considered.
You can use income from the following in order to fund a Chapter 13 Bankruptcy plan:
- your income from your employment - regular wages, salary, or tips
- your spouse’s income from employment
- income from self-employment
- wages from seasonal employment or temporary work
- commission from sales or commissions from other work
- income received from pension payments
- Social Security disability or income benefits
- income from disability or workers' compensation benefits
- unemployment benefits and strike benefits
- public benefits or social welfare income
- child support or alimony you receive
- rental income or contributions towards rent
- proceeds from the sale of property
- trust benefits or structured retirement income
So if you have a source of regular income as listed above how do you determine if you have disposable income?
Eligibility for a Chapter 13 Bankruptcy depends on the amount of your income, less your necessary living expenses, which in turn leaves “disposable income” available for your creditors. Determining disposable income in a Chapter 13 Bankruptcy involves the bankruptcy means test. If you haven’t heard about the most recent changes to the Bankruptcy Code, the bankruptcy law has a means test in order to determine your eligibility to file for Bankruptcy. The Bankruptcy Means Test is applied to all Chapter 7 debtors to make certain that they aren’t “abusing” the system. In a Chapter 13 Bankruptcy the means test isn’t necessary, but very similar documentation and calculations are required to determine the disposable income available to pay to creditors.
The bankruptcy means test is based on the Texas median household income in your specific area. The test looks at all of your income for the preceding 6 months before the date of filing. It determines your average monthly income, and multiplies that amount by twelve. The median income is actually broken down to your specific Texas zip code. That amount is then compared to the median income in the state of Texas for a household of similar size. This specific median income is based on the findings of the latest US Census Bureau report. If you are over the median income, then a second set of tests are conducted to determine what disposable income you have, if any, at the end of the month. The bankruptcy means test is the primary factor which determines eligibility to file for Chapter 7 Bankruptcy. Generally, if you have at least $100.00 a month in disposable income, you are probably eligible for Chapter 13 Bankruptcy. In a Chapter 13 Bankruptcy it is utilized to determine your disposable income available for creditors.
If you want to take the bankruptcy means test to see what your disposable income is in order to file for Chapter 13 Bankruptcy Texas: CLICK HERE
Even if you have regular disposable income to potentially fund a Chapter 13 Bankruptcy plan, there are other mandatory provisions that must be complied with:
- Only individuals can file a Chapter 13 Bankruptcy
- In order to file a Chapter 13 Bankruptcy you must be an individual or married couple filing jointly. You can also be a small business owner such as a sole proprietor or a member of a business partnership and you can include business debts for which you may be liable in your Chapter 13 bankruptcy. You cannot however, file a Chapter 13 Bankruptcy for a corporation, limited liability company (LLC), business trust, or a partnership.
- You cannot file Bankruptcy if you have had a previous discharge prohibiting your filing
- You are prohibited from filing a Chapter 7 Bankruptcyif you received a previous bankruptcy discharge in another Chapter 7 Bankruptcy in the previous eight (8) years, or you received a discharge in a previous Chapter 13 Bankruptcy in the previous six (6) years.
- You Must Be Current on Your Income Tax Filings
- In order to file for Chapter 13 Bankruptcy, it is necessary to have filed your tax returns for the years preceding the filing. It is required that you submit proof that you filed your income tax returns were filed prior to your bankruptcy filing date. If you don't comply with the requirement to provide your returns or transcripts of the returns for those four years preceding the bankruptcy filing, your Chapter 13 Bankruptcy case will be dismissed.
- Your Debts must be within the statutory limits to file for Chapter 13 Bankruptcy
- If your secured debt exceeds $1,010,650. 00 (this amount is increased every three years) you cannot file for Chapter 13 Bankruptcy. If you’re wondering what a “secured debt” is, a secured debt is one that you have pledged collateral for, or stand to lose specific property if you don't make your payments to that creditor. Home loans, car & truck loans, and appliance loans are the most common types of secured debts. A debt can also be considered secured if a creditor has filed or effectuated a lien against your property. Additionally, your unsecured debts cannot exceed $336,900.00 (this amount is also increased every three years.) If you’re wondering what an “unsecured debt” is, an unsecured debt is a debt that you haven't pledged any collateral for. The majority of debts are unsecured, which go to include credit cards, medical bills, utility bills, and certain taxes.
- You cannot file Chapter 13 Bankruptcy if you have been barred by a prior bankruptcy dismissal
- If you had a previous bankruptcy filing that was dismissed within the last 180 days and requested that your case be dismissed after one of your creditors filed a motion to lift stay, or if the Bankruptcy Court determined that you case was fraudulent, or was filed as an “abuse” of the bankruptcy system, or you violated an order of the court order, you are prohibited from filing for a Bankruptcy until such time passes.
- You cannot file Chapter 13 Bankruptcy if you have not taken the Pre Bankruptcy Credit Counseling Course
- In order to file for Chapter 13 Bankruptcy, you are required to take a Credit Counseling Debtor Education course approved by the Office of the U.S Trustee before the filing of your Chapter 13 case. This pre-filing requirement must be completed with an approved provider as opposed to just any credit counseling company. Upon completion you will receive a “Credit Counseling Certificate” which evidences your completion of the course.
There are other important requirements to of a Chapter 13 Bankruptcy such as providing tax returns, check stubs from employment, and careful review of the types of debts to be included and potentially discharged.
While most people seeking to file for Chapter 13 Bankruptcy in Texas might be eligible, it is important to obtain advice from an experienced Texas Bankruptcy Lawyer to explore all of your debt relief options.
If you live in Austin, Houston, San Antonio, Dallas, Waco, Victoria, Plano, Garland, or most anywhere in Texas, and are interested in filing for Chapter 13 Bankruptcy, contact The Law Offices Of R.J.Atkinson,LLC for a free initial consultation and a free bankruptcy means test to see if you are eligible to file for Chapter 13 Bankruptcy. We would like to help you to obtain a fresh start.
Can you file for Chapter 13 Bankruptcy? Questions about Chapter 13 Bankruptcy?
Contact Texas Bankruptcy Lawyer R.J.Atkinson: 800-436-9056