What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is often referred to as "reorganization" bankruptcy. It allows you a way to reorganize your debts and provides you time to make up your missed mortgage payments. It can also make your mortgage more affordable in the long term by reducing your total outstanding debt, providing you with the finances needed to pay your mortgage. When you file for Chapter 13 bankruptcy you will be required to put together a debt repayment plan. This plan will need to prove you have enough income to continue making mortgage payments, while at the same time make up mortgage payments you’ve missed, and also pay back a percentage of your other debts owed.

Repayment plans must be constructed to be paid off within a 3 to 5 year period. Staying current with your payments for 3 to 5 years could be challenging so it’s imperative your plan is realistic and attainable. The rewards however will far outweigh the challenge as all your remaining unsecured debt will be wiped out when your repayment plan has been fully satisfied, and your house will still be yours.

Can Filing Chapter 13 Bankruptcy Stop My Foreclosure?

The moment you file for Chapter 13 Bankruptcy, the federal bankruptcy court issues what’s known as a stay. This is a court order that bars all of your creditors, including mortgage lenders, from making any attempt to collect a debt you owe unless they obtain permission from the court. Once your repayment plan is approved by the judge, you will be safe from foreclosure over the entire length of your repayment plan, as long as you keep making the required plan payments and your loan payments. 

Can Chapter 13 Bankruptcy Eliminate Second and Third Mortgages?

Chapter 13 Bankruptcy can essentially get rid of liens on your home created by second and third mortgages provided they are wholly unsecured by your home. Meaning, if your home were to be sold the income would be inadequate to pay back any portion of the lien.

What Exemptions Am I Entitled to Under Chapter 13 Bankruptcy?

Certain homestead property, retirement income, insurances, personal property, public benefits, tools of trade, and wages are protected under Texas State Law and cannot be taken from you during Chapter 13 Bankruptcy when you meet certain criteria. For a more complete list of Texas Exemptions please view:

Texas Bankruptcy Exemptions
 

How Do I Know If Chapter 13 Bankruptcy Is Right For Me?

Choosing whether to file a Chapter 13 Bankruptcy or Chapter 7 Bankruptcy can be difficult because of the many factors involved. Please contact us for a free initial consultation so that we are able to properly assess which Chapter will best suite your needs.