2 Galleria Tower
13455 Noel Road, Suite 1000, Dallas, TX 75240
Telephone: (972)980-8000
E-Mail: JerryMelton@jerrymelton.com

English

Spanish

* Recommend this site

Contact Jerry Melton for a free initial consultation.

CHAPTER 13 Bankruptcy (Texas)

The Federal Bankruptcy Code defines Chapter 13 as, "an adjustment of Debt of an individual with regular income". 

In a chapter 13 bankruptcy, debts are consolidated and reduced to one monthly payment, based on your monthly disposable income; allowing you to 'catch up' on any delinquent payments, taxes,  etc, while keeping your property. In most cases, you are allowed to keep your home or car and it gives you some much needed 'breathing room' to catch up the delinquent payments over a period of 3-5 years.

Unsecured debts may be paid in full for as little as 1 cent on the dollar - or 1%percent of what you actually owe. The remaining .99 cents is then discharged.

You may also be able to pay only what your secured property is "really" worth - not what you actually owe on it.

The amount you pay to your unsecured creditors is determined by the amount of "disposable" income you and your spouse have available each month. You and your spouse are allowed to keep enough of your income to pay for all reasonable living expenses. Any "extra money" is paid to your creditors in monthly installments until the Chapter 13 Bankruptcy "Plan" is completed.

Chapter 13 is not available to partnerships or corporations. A person who has a small unincorporated business may file Chapter 13.


You may file Chapter 13 if you owe (on the date of filing the petition): 

• Unsecured debts of less than $250,000

• Secured debts of less than $750,000.

Advantages of Chapter 13 

• Stops all creditors from contacting you or taking any direct action towards you to collect a debt.

• Halts all attempts by creditors to repossess property 

• Delinquent bills are paid through the Chapter 13 Plan

• Creditors begin dealing with Trustee instead of you 

• No interest, penalty, or late charge is allowed on any unsecured debt, even on IRS taxes and student loans. 

Chapter 13 provides a repayment schedule that allows you to pay off your debts over 3-5 years, you keep your exempt property.  After the terms of the chapter 13 plan are completed, you may reestablish your credit using the new budgeting skills learned during the Plan.

Debt Priority 

Secured debts are paid first, secured by collateral that can be repossessed if the debt is not paid, such as a car loan or mortgage payment. 

Priority debts are paid second, from the money remaining after your secured debts are paid and include taxes.

Unsecured debts are paid last out of the money remaining after secured and priority debts are paid. Unsecured debts may be paid as little as 1 cent for every dollar you actually owe; or 1 percent of the debt.

Delinquent Payments on Secured Property Debts

Delinquent payments on secured debts can be reorganized under Chapter 13 and paid out over the length of the Plan.  You can catch up delinquent payments in small monthly installments and keep your property.

If you have questions about Bankruptcy matters, please do not hesitate to 
contact Jerry Melton.